Study On The Effect Of Internet Finance On Commercial Banks’ Profits In China

2013is known as "the first year of the Internet Finance" with the concept of it known to all. Nowadays, with its increasingly influence, the Internet finance has also caused a "catfish effect" which means it is forcing a heavy stress on commercial banks as well as effectively helping to promote the innovation and restructuring of them.So it is necessary for us to study the effect of Internet finance on commercial banks’profits. In this paper, we began with the clarification of the concept of Internet finance with describing the difference between the Internet finance and finance on the Internet. And the current development of Internet finance as well as the advantages of both Internet finance and commercial banks is also elaborated in this part. Based all of this, we started our analysis through commercial banks’balance sheet and income statement to discuss the mechanism and quantitative effect different business models of the Internet finance has imposed on commercial banks. We believe that different business models of Internet finance impact commercial banks’profit mainly through interest incomes and fee incomes based on our analysis. Above all, the strongest shocks come from products like Yuebao, the third-party payment and the third-party financial product sales platform. However, this kind of impact would not become a disaster for commercial banks. Furthermore, this paper chooses products such as the third-party payment and Yuebao that have large effects on commercial banks to com-pare with similar operations in the USA and find that these businesses will not have significant effects on commercial banks. In the end, this paper brings up some advice for the commercial banks to confront the challenges from internet finance through a discussion of the competition status of the two in different operations.