Research On The Effect Of Internet Finance On China's Commercial Bank's Profitability And Risk

In recent years,the Internet thinking like a contemporary Renaissance,quickly swept across the country.Third party payment,Crowd funding,Internet banking,Internet insurance and other financial products have changed the way people live and consume.Internet finance with its low cost,high efficiency,wide coverage and other advantages gets a large number of consumers of all ages,and also affects and changes the traditional financial formats and patterns.The rapid development of Internet finance has led to commercial bank funding costs rise,intermediary financial function weakened and the gap of savings and loan narrowed.But it has also promoted the commercial banks to actively change their business and business models to consolidate their financial position.So how does the development of Internet finance affect commercial banks? Will Internet finance exacerbate the risk of commercial banks? How does Internet finance affect the profitability of commercial banks? How should we deal with the relationship between Internet finance and commercial banks? This paper analyzes the above problems through the combination of theoretical analysis and empirical research.Based on the existing research,firstly,this paper reviewed the paper of Internet finance and traditional finance and the Internet financial impact on the risk and benefit of commercial banks.Secondly,we elaborated the definition,characteristics,development process and function type of Internet finance.Thirdly,through analyzing the influence of Internet finance on the assets,liabilities and intermediate business of commercial banks,we analyzed the influence of Internet finance on the profit and risk of commercial banks.In the empirical part,this paper constructs the Internet financial development index based on the "text mining method" and the factor analysis method,and then using the 2003-2015 panel data of 14 commercial banks to construct nonlinear regression model to analysis the influence of Internet finance on the profit and risk of commercial banks.The results show that:(1)the influence of Internet finance on the profit and risk of commercial banks tend to be inverted "U".It shows,at the beginning of the financial development of the Internet,Internet finance has promoted the innovation and reform of commercial banks,raised the benefits of commercial banks and reduced the bankruptcy risks of commercial banks.In the later period of the development of Internet finance,the rapid development of Internet finance has intensified the financial development,resulting in commercial banks "off-media" phenomenon,compressed the profits of commercial banks,and increased bankruptcy risk of commercial banks.(2)In the face of the impact of Internet finance,the response of different types of commercial banks is heterogeneous.The response of the big four commercial banks to Internet finance is relatively slow,and the response of other joint-stock commercial banks is more sensitive.Finally,based on the theoretical and empirical research results,combined with China's current national conditions,this paper provides the corresponding policy recommendations to promote the healthy and stable development of China's financial industry.