Research On The Impact Of Internet Finance On The Profitability Of City Commercial Bank

In recent years,Internet finance has developed rapidly and gradually become an important part of the financial system.Various new businesses and models have emerged,and these financial products have attracted people’s attention with their extremely low prices and high returns.As an important force to support the development of China’s real economy,city commercial banks occupy an important position in the financial market.With the continuous development and growth of Internet finance,the products and services of city merchant banks are replaced by Internet financial companies,so city merchant banks face the risk of being marginalized.In such an environment,a study on the impact of Internet finance on the profitability of urban commercial banks can help urban commercial banks further optimize their strategic thinking,innovate their profitability models,and promote the development of the financial market in a healthy and orderly direction.This thesis uses a combination of theoretical and empirical analysis to explore the impact of Internet finance on the profitability of urban commercial banks.Theoretical aspect: The four theories of financial intermediation theory,financial deepening theory,platform economy theory and long-tail theory are used to explain the relationship between the two.Empirical: Using the third-party payment data as an indicator to measure the development of Internet finance,the panel data of 47 urban commercial banks in east,central and western regions of China from 2013 to 2021 are selected for modeling analysis to examine the impact of Internet finance on the profitability of urban commercial banks in terms of profitability level and profitability structure.Among them,the profitability level reflects the asset status and the size of profitability of urban commercial banks;the profitability structure reflects the innovation ability of banks.In addition,the article further explores the variability of the impact of Internet finance on the profitability of city commercial banks in different regions.The regression results show that: the development of Internet finance can significantly reduce the profitability of urban commercial banks,and in terms of different regions,the impact of Internet finance is most significant in the western region,followed by the central region and finally the eastern region;Internet finance can significantly increase the non-interest income of urban commercial banks,and can force them to adjust their business structure and explore new business breakthroughs.In terms of different regions,the speed of adjusting business structure is greater in the east than in the west than in the center.In order to make the regression results more accurate,this thesis uses the method of replacing indicators to test the validity of the model.Finally,the thesis proposes optimization countermeasures in four aspects,namely: strengthening the cooperation between urban merchant banks and Internet financial platforms,innovating business models,strengthening financial risks,and implementing differentiated management for urban merchant banks in different regions.