Research On The Influence Of Internet Consumer Finance On The Profitability Of Commercial Banks

The "14th Five-Year Plan" proposes to accelerate the construction of a new development pattern with the domestic circulation as the main body and the domestic and international double circulation promoting each other.Under the "double cycle" pattern,consumption has become a key engine for expanding domestic demand and driving economic growth,and consumer finance has become a booster for supporting the development of consumer and real economy.With the changes in information technology,rising income levels and changing consumer attitudes,China’s Internet consumer finance has been developing rapidly,with convenient,efficient and lowthreshold online services with lower transaction costs compared with traditional lending services of commercial banks,crowding out the market share of commercial banks’ consumer credit and posing certain impacts and challenges to their profitability.Therefore,it is significant to study the effect and mechanism of the impact of Internet consumer finance on the profitability of commercial banks.In this paper,we firstly review the literature from three aspects,such as the basic connotation of consumer finance and Internet consumer finance,and secondly analyze the effect mechanism by combining relevant theories and current situation descriptions.Again,six bank-level characteristic variables such as asset size,cost-to-income ratio,and loan-to-deposit ratio are selected along with three macro control variables such as GDP growth rate,and data from 66 sample banks from 2011-2021 are used for empirical analysis.It is found that: first,the development of Internet consumer finance has a significant negative impact on the profitability of commercial banks,which passed the endogeneity and robustness tests,and the direction and significance of the regression results did not change after the model was corrected with clustering standard errors.Second,there are significant differences in the degree of impact of Internet consumer finance on commercial banks of different ownership,with agricultural and commercial banks being the most significant,followed by joint-stock banks,state-owned banks,and city commercial banks.Third,under the substitution of different proportions of different yield loan products,urban commercial banks are more sensitive to changes in the average return on interest-earning assets and the average net interest margin,and stateowned banks are less sensitive.Fourth,the moderating effect based on financial technology can effectively improve the impact caused by Internet consumer finance on commercial banks.Finally,this paper proposes countermeasures from the perspectives of commercial banks’ daily operation and government supervision and management:first,to tailor the services to the "bank" and deepen innovative and differentiated services;second,to optimize resource allocation and enhance anti-risk capability;third,to raise the entry threshold of the industry and clarify the behavioral norms of each subject;fourth,to create a good market competition environment;fifth,accelerate the construction of credit system to promote the orderly and healthy development of Internet consumer finance.