Study On The Impact Of Internet Finance On The Profit Efficiency Of Chinese Commercial Banks

The liberalization of the loan-to-deposit ratio and the interest rates of deposit and loan marked China's financial market has basically completed preparations for the interest rate marketization,and it is difficult for commercial banks to continue to rely on the interest rate gap of deposits and loans to obtain major income.The emerge of Yuebao in 2013 marked the beginning of the booming of Internet finance.Since then,Internet giants have stepped into the financial industry and launched multiple Internet finance services such as payment settlement,wealth management,and various types of insurance.This has brought about a technological revolution that has subverted traditional finance and has broken the monopoly position of commercial banks.Since 2014,the China Banking Regulatory Commission(CBRC)has successively issued financial institution licenses to a number of Internet companies,which has intensified the external competition of commercial banks.Under the multiple negative influences,the growth rate of profitability of commercial banks plummeted.Since 2014,the five state-owned banks have maintained low single-digit growth,and have even experienced negative growth in 2016.the number of business outlets and ATM machines have retreated significantly,the total institution number of five state-owned banks in 2016 has decreased 0.2%.The situation of layoffs is even more severe.In 2016,the total number of employees in the five state-owned banks decreased by 1%.The pressure on the bank industry is increasing with each passing day.Internet finance,while occupying the market share of China's commercial banks,has also stimulated the development vigor of it,helped the upgrading of business management models and business innovations,launched a wide range of Internet services,and carry out extensive cooperation with Internet companies.The banking industry,as the leading force in China's financial industry,plays a crucial role in macroeconomic policy control and resource allocation.The sustainable development of Internet finance will have an impact on the profit efficiency of China's traditional commercial banks.What are the impact channels and how commercial banks should be dealt with? These are topics that deserve to be studied in depth.First,based on traditional economic theories and internet finance related theories,this thesis separately elaborates the channels of Internet payment,Internet financing,internet wealth management,and financial internet access to commercial banks.Then,this thesis uses the financial data of 235 domestic commercial banks from 2005 to 2016 as a sample,uses the SFA model to estimate the profit efficiency of China's commercial banks.Based on this,a panel data random effect model is used to empirically analyze the effects of diverse Internet finance business on the profit efficiency of commercial banks.Finally,this thesis successively classifies the samples according to the ownership and the asset scale calculated by the panel threshold model,and discusses the influence of Internet finance businesses on the profit efficiency of different types of commercial banks.The basic conclusions of this thesis are as follows: First,from technically,Internet finance may affect the profit effeciency of commercial banks through the following channels: Internet payment and Internet financial management compete with commercial bank intermediary business and push up the deposit interest rate,and Internet lending squeezes loan market of commercial bank and deposit-loan spread.Internet finance business of non-financial enterprise diverts the deposits of commercial banks.Therefore,the output quantity and price of commercial banks will be reduced when there are no significant changes in the input quantity,thereby reducing the profit efficiency of commercial banks;Internet finance will also promote commercial innovation and reduce operating costs,reducing the input of factors,while promote output growth,thereby improving its profit efficiency.Secondly,the empirical regression shows that in the period 2005-2016,the profit efficiency of China's commercial banks has fluctuate greatly,and the overall trend is downward.The profit efficiency of commercial banks with different ownership varies,among which,the profit efficiency of city commercial banks is relatively low,but its volatility is also the highest.The profit efficiency of state-owned commercial banks is in the middle.The profit efficiency of joint-stock commercial banks is relatively lowest.Little different between the profit efficiency of commercial banks of different scales and the volatility tends to be consistent.Third,the empirical analysis shows that various businesses of the Internet finance have significant effects on the profitability of commercial banks at different levels of significance: Internet payments sharply reduce the profit efficiency level of China's commercial banks.The most influential ones are joint-stock commercial banks,while city commercial banks are relatively less affected.Internet financing also drastically reduce the profit efficiency of China's commercial banks,but the impact is modest.The relatively largest impact be on city commercial banks,and the impact on state-owned commercial banks is small.The hindrance of Internet wealth management for profit efficiency of commercial banks is also small.Relatively influential ones are the joint-stock commercial banks.the online banking business of commercial banks will slightly increase their profit efficiency,and only the city commercial banks have a significant effect.In addition,the largest impact of various businesses on Internet finance is on the large commercial banks,while the internet business of commercial banks only significantly promotes the profit efficiency of smallscale commercial banks.Based on the above conclusions,this thesis argue that commercial banks should consolidate the positioning of loans for large-scale enterprises,deeply tap accumulated customer data to feature products,and expand Internet services based on analysis of customer needs,to deal with the impact of Internet finance on its profit efficiency.