Research On The Effect Of The Internet Finance On The Efficiency Of Commercial Banks In China

In recent years,with the popularization of third-party payment and the rapid growth of P2 P network loan companies and platforms,large numbers of Yu'e Bao,Yu Libao and other financial product platforms,the concept of Internet finance frequently appears in front of people.Internet finance,with its advanced Internet technology and thinking,as well as the advantage of being more convenient,diversified and with a wide audience compared with traditional finance,has made a great impact on the traditional commercial banking industry.The traditional banking industry is facing the reality of constantly being transformed and subverted,and the level of profit efficiency will be changed.But at the same time,the spillover effect of technological progress brought by Internet finance will also form demonstration and imitation effects on commercial banks,which will also change their cost efficiency.However,there are still few theoretical and empirical studies on how Internet finance affects the cost efficiency and profit efficiency of traditional commercial banks.Therefore,it is necessary for us to analyze the mechanism and use the empirical method to verify the theory.In addition,the banking structure system of our country mainly takes the state-owned joint-stock commercial bank as the main body,the non-state-owned commercial bank coexists,these two have the big difference in the scale management,the resources restriction and the structure of property right and so on.And Internet finance has a different impact on it.In the two aspects of efficiency measurement and empirical research,this paper classifies commercial banks in China,and gets the results of Internet Finance's impact on the efficiency of two different types of commercial banks,and then gives targeted recommendations.This paper mainly adopts the method of combining qualitative and quantitative analysis,combining theory with practice,and analyzes the influence of Internet Finance on the efficiency of Chinese commercial banks from different perspectives.1.Definition of Internet Finance and bank efficiency.Firstly,the concept of Internet Finance has been defined,and introduces the main five modes of the current Internet finance including third party payment,online banking,network data loans,P2 P and crowd financing,raises the definition and characteristics and analyzes its influence on the current commercial banks.Secondly,it introduces the meaning and classification of bank efficiency,and points out that the efficiency of this paper is the X efficiency proposed by Berger in 1992,namely profit efficiency and cost efficiency.2.Theoretical analysis and hypothesis.According to the effect of ‘Catfish Competition',competition has been formed over commercial banks,and ‘the Technology Spillover Effect' forms the demonstration and imitation effect on commercial banks.This paper analyzes the financial impact of the Internet related to some theories for commercial bank profit efficiency and cost efficiency,finally puts forward the research hypothesis.After combing the research done by others,this paper compares the advantages and disadvantages of the two methods of stochastic frontier analysis and data envelopment analysis,and selects the stochastic frontier analysis method to calculate the cost efficiency and profit efficiency of the bank.3.Measurement of efficiency.This paper selects data of 69 commercial banks from 2007 to 2016,compared to Cobb Douglas production function and the translog production function,the final selection is the translog production function of the whole sample of bank and commercial bank efficiency measure for classification,and the related inspection and analysis.4.Empirical Research.In this paper,the panel data of 69 commercial banks are selected as samples.Considering the continuity characteristics of bank efficiency and the possibility of endogenous,autocorrelation or heteroscedasticity problems,the panel fixed effect estimation method is used.The explained variable is the profit efficiency and cost efficiency of commercial banks,and the explanatory variable is Internet finance,considering the difficulty of collecting data related to Internet finance due to the long time span.The third party payment has the largest share in the Internet,so this paper takes the transaction scale of the third party payment as the proxy variable of Internet finance.According to the internal and external factors that affect the efficiency of banks,six control variables are selected to establish the correlation regression model,and the results of the influence of Internet finance on all sample banks and subtypes of banks are studied.This paper also compares and analyzes the reasons why different types of bank efficiency are influenced by Internet finance,and makes a robust test on the efficiency of bank which is calculated beyond logarithmic production function instead of that calculated in the previous paper.The results are consistent with the previous empirical results.In this paper,through the relevant theoretical research,cost efficiency and profit efficiency measurement and empirical research,we draw the following conclusions: 1.Overall,the cost efficiency and the profit efficiency of commercial banks is down over time.And the speed of profit efficiency is faster than cost efficiency.2.There is a significant negative relationship between the development of Internet finance and the efficiency.The development of Internet finance can effectively decrease the commercial bank's cost efficiency,and there is a significant negative correlation between the development of Internet finance and the profit efficiency of commercial bank.The development of Internet finance intensifies the market competition of the banking industry and reduces the profits of commercial banks.For the banks of different types,there is a significant negative correlation between the development of Internet finance and the cost efficiency of state-owned banks.There is a significant negative correlation with the cost efficiency of non-state-owned banks,while the development of Internet finance has no significant impact on the profit efficiency of state-owned banks,depending on their scale of operation and capital advantages.The profit efficiency of non-state-owned banks is negatively correlated,and the development of internet finance reduces the profit efficiency of non-state-owned banks.