Research On The Impact Of Financial Technology Development On The Stability Of Commercial Banks In China

In recent years,financial technology has developed rapidly.While empowering traditional businesses of commercial banks and improving their service levels and operational efficiency,financial technology companies have also engaged in fierce competition with commercial banks in various business areas,squeezing their profit margins.In this context,exploring the impact of financial technology development on the operational stability of commercial banks is of great significance for China’s commercial banks to achieve a smooth digital transformation and high-quality development of the banking industry.This article first clarifies the definition of Fintech and the operational stability of commercial banks,and conducts research based on the development of Fintech and the current status of digital transformation of commercial banks in China.Secondly,this article fully analyzes the theoretical mechanism that the development of financial technology affects the operational stability of commercial banks.After detailed theoretical exploration,this article concludes that the level of financial technology development has both competitive and technological spillover effects on commercial banks,with competitive effects weakening the operational stability of commercial banks,and technological spillover effects strengthening the operational stability of commercial banks.The overall impact depends on the relative size of the two.Using the relevant data of 125 commercial banks in China from 2011 to 2020 as a sample,using the ratio of ROE to NPL ratio to measure the operational stability of commercial banks as the explanatory variable,and using the adjusted Peking University Digital Financial Inclusion Index as the core explanatory variable to measure the level of financial science and technology development.Then,we empirically test the specific impact of the development of financial technology on the operational stability of China’s commercial banks.The empirical results show that the impact of the development level of financial technology on the operational stability of commercial banks is an "inverted U-shaped" pattern that rises first and then falls.In the early stage of development,the competitive effect of financial technology development on the operational stability of commercial banks is less than the technology spillover effect,which will strengthen the operational stability of commercial banks;After reaching a certain level,the competitive effect of financial technology development on the operational stability of commercial banks is greater than the technology spillover effect,which will weaken the operational stability of commercial banks.Finally,based on theoretical and empirical analysis,this article puts forward targeted recommendations for commercial banks and regulatory authorities,helping Chinese commercial banks successfully achieve digital transformation and improve operational efficiency on the basis of maintaining stable operations,and also providing useful reference for regulatory authorities to guide commercial banks to achieve high-quality development.There are three innovative points in this article.First,previous literature has mostly focused on the impact of financial technology development on bank profitability,total factor productivity,and risk taking.This article has enriched relevant content on the impact of financial technology on bank stability from both theoretical and empirical perspectives;Second,this article uses micro data from 125 large,medium,and small banks,which makes the data more abundant and representative;The third is to adopt the digital finance inclusive index released by the Digital Finance Research Center of Peking University,and adjust it appropriately to more comprehensively and effectively measure the financial technology development environment faced by banks.