Research On The Influence Of The Development Of Digital Inclusive Finance On The Credit Risk Of City Commercial Banks

In recent years,the integration and penetration of digital technology and inclusive finance has provided commercial banks and other financial service institutions with a key booster to develop the long-tail market and promote digital transformation.However,the rapid development of digital inclusive finance has also brought challenges and risks to commercial banks that cannot be ignored.To a certain extent,digital inclusive finance has intensified the competition in the loan,deposit and intermediate business of urban commercial banks,leading to an increase in their capital costs and a significant decline in their profit margins,which in turn has given rise to a series of credit risk problems for urban commercial banks.Moreover,due to their business characteristics,urban commercial banks’ business scope and business targets are mainly limited to localcities,and their cooperative customers are usually local SMEs and residents,so their business operations are significantly affected by the development level of local digital inclusive finance.Therefore,the research on the impact and effect of digital inclusive finance development on credit risk of urban commercialbanks can provide reference for credit risk management of urban commercial banks on the one hand,and provide theoretical basis for regulators on the other.At the level of theoretical research,this paper firstly composes the definition of the connotation of digital inclusive finance by various scholars and gives the definition of the concept of digital inclusive finance in this paper on this basis.Then,based on the long-tail theory,marginal profit effect theory and information asymmetry theory,this paper analyzes the role of net interest margin and deposit-lending ratio in the transmission mechanism of digital inclusive finance affecting the credit risk of urban commercial banks.Secondly,this paper provides an in-depth analysis of the development status of each region and each application area of digital inclusive finance in China and points out the future development direction of digital inclusive finance in China,and also shows the current situation of credit risk of urban commercial banks in China,mainly including the non-performing loan rate and credit rating.At the empirical research level,this paper selects the panel data of 118 urban commercial banks from 2011 to 2020 as the research sample to explore the impact of digital inclusive finance development on the credit risk level of urban commercial banks.Regression analysis using a fixed effects model shows that under the influence of digital inclusive finance,the credit risk level of urban commercial banks is showing an upward trend,indicating that the development of digital inclusive finance has exacerbated the credit risk of urban commercial banks.Secondly,this paper verifies the robustness of the empirical results by using the instrumental variable method and the method of eliminating key years.In addition,in order to verify the transmission mechanism role of net interest margin and deposit loan ratio in the process of action,this paper constructs a mesomeric effect model and conducts an empirical test.The results show that digital inclusive finance will worsen the credit risk of urban commercial banks by reducing the net interest margin of urban commercial banks and improving the deposit loan ratio.Finally,this article empirically studies the heterogeneity of the impact of digital inclusive finance development on the credit risk of urban commercial banks from three dimensions: asset size,profitability,and location.Specifically,small and less profitable western urban commercial banks are more sensitive to the impact.Based on the conclusions drawn from the above empirical analysis,this article proposes corresponding policy recommendations from the perspectives of government regulatory authorities and urban commercial banks.