The Empirical Research Of Internet Banking On The Profitability And Risk Of Commercial Banks

In recent years, under the background of market-oriented interest rate policy and the development of Internet banking, many Internet banking products, such as, crowdfunding, net loan, Internet financial products sales and mobile payment products, have changed people's way of life and consumption. Internet banking with high efficiency, low transaction costs, convenience, as well as a variety of financial products and other advantages, wins the favor of a large number of investors. Facing the Internet banking and the impact of interest rate marketization reform, commercial bank's funding costs rise. In addition, the profit pattern of commercial bank, which rely on spread, has been strongly affected. This series of changes and shocks, forcing banks to narrow spreads, expand the intermediate business and seek higher loan interest rates, drive commercial banks to make a series of measures to strengthen their financial position. In this context, our country commercial bank's profitability and risk will be subject to what kind of impact, whether the emergence of Internet banking, will promote or block the reform of China's financial industry, these are questions that is worth studying. Besides, the Internet financial impact currently on commercial banks research has not yet come to consistent results. Therefore, the research on the relationship between Internet banking and commercial banking is necessary. This paper will analyze the above problems through the combination of theoretical and empirical research methods.On the basis of existing research, firstly, this paper reviews the literatures of Internet Finance, traditional finance and the impact of Internet banking on commercial banks' operating capacity and risk taking. Secondly, we elaborated the theory of Internet banking support, business model, profitability model. Thirdly, we summarize the impact of Internet banking on commercial bank assets, liabilities, intermediate business income and risk bearing capacity. Finally, we propose bank profit ability ROA, bankruptcy risk and the risk of non-performing loans as explanatory variables, using entity fixed effects regression model. So that, we can empirically study the impact of Internet banking on commercial banks is positive or negative.Taking the data of 11 listed commercial banks in our country 2007-2014 years as the sample, we find the empirical results show that, in terms of profitability, the development of Internet banking has a significant negative impact on the ROA indicators of commercial banks, which means the profitability of commercial banks decline in the face of the impact of the Internet banking. But in regard to risk management, the development of Internet Banking has positive significant impact on commercial banks bankruptcy risk and non-performing loans.The above conclusions not only can make the commercial bank of our country better understand the impact of Internet banking on the profitability and risk degree of influence. Besides, commercial banks can dig out valuable information from the quantitative relationship between commercial banks and the Internet banking, Which can help commercial banks to better grasp the opportunity for transformation and upgrading.