Research On The Impact Of Internet Finance On The Profitability Of Foreign Banks In China

Internet finance is a kind of emerging finance that has only developed in recent years.Its development mainly stems from the popularity of a variety of popular high-tech and social networks.Its role is mainly reflected in capital finance,security payments,and information mediation..With the increasing emphasis on Internet finance and the rapid development of related technologies,a large number of Internet companies that have resorted to information technology and Internet technology have also begun to rise rapidly and gradually began to provide online payment,microfinance and other financial-related services..In 2009,smart phones began to be popularized in China.Due to the convenience of smart phones and the Internet,the habits of smart phone users such as consumption and payment have also begun to change.At this point,Internet-based companies are different from computer technology in that they use the Internet as their carrier.Financial internet finance began to rise.The major advantages and characteristics of Internet finance pose a threat to the profitability of commercial banks.As a result,the traditional financial industry such as banks has been greatly impacted.Therefore,the traditional financial industry has to take some measures to carry out reforms,such as innovative profit models and business models,improved management systems and technical systems,and foreign banks.Without exception,its profitability in China,including assets,liabilities,and intermediary businesses,has been greatly affected by large-scale third-party payments,internet funds,and P2 P lending models.Therefore,we first conducted research on Internet finance and foreign banks inthree areas.These three aspects refer to the nature of Internet finance,the development of Internet finance,and the impact of Internet finance on the profitability of foreign banks.The financial system is of great significance,especially with regard to the countermeasures taken by commercial banks.At present,many foreign-funded banks have begun to change their traditional concepts,actively use the Internet technology to achieve data analysis and excavation,and at the same time recruit a large number of Internet talents and cooperate with Internet finance companies to develop their own Internet businesses.On the basis of studying a large number of literatures on the interrelationship between profitability of internet finance and foreign banks,this paper analyzes the impact of internet finance on foreign banks from both theoretical and empirical perspectives.Through combing relevant theories of Internet finance at home and abroad,such as long tail theory and financial intermediary theory,this paper analyzes the influencing factors of profitability of foreign banks in China and makes a theoretical review of Internet finance's profitability of foreign banks,and then analyzes the impact of Internet finance.The profitability of foreign banks and the mechanism of risk capabilities demonstrate the substitution and innovation effects of internet finance on foreign banks,and based on this,they put forward research hypotheses and build the dynamics of the annual data for foreign banks operating in China from2011 to 2016.The panel measurement model was verified by descriptive statistics,unit root test,cointegration test,and empirical analysis of the GMM.The results showed that Internet finance negatively affected the profitability of foreign banks,representing the Internet finance to foreign banks.The innovation effect is less than the substitution effect.Finally,it was proposed that foreign banks operating in China should “satisfy Internet finance talents,accelerate technological innovation”,“join Chinese banks to reduce political resistance to collect information,”“develop new markets,expand customer breadth,”“build new payment systems,”“accommodate finance."Intermediary weakening,providing new types of intermediary services" strategies and recommendations.