A Study On The Impact Of Internet Finance On The Profitability Of Commercial Banks

The rapid development of Internet technology has greatly changed the operation mode of traditional finance and produced a new financial form-Internet finance.The traditional business model and profitability of commercial banks are facing enormous challenges.In this context,exploring the specific impact of Internet Finance on the profitability of commercial banks is conducive to accelerating the transformation of commercial banks and improving their profitability.At the same time,it is of great significance to promote the sustainable development of the financial industry.Based on research ideas of theoretical analysis-factual presentation-empirical analysis-conclusions and suggestions,this paper explores the impact of Internet Finance on commercial banks' profitability by combining qualitative analysis and quantitative analysis.In the part of qualitative analysis,the paper summarizes the previous relevant research,combs the theoretical basis of the rapid development of Internet Finance and its impact on commercial banks,and analyses the impact path of Internet Finance on commercial banks' profitability from three aspects: assets,liabilities and intermediary business.At the same time,it also elaborates on the development history and status quo of Internet Finance and commercial banks' profitability.This paper provides theoretical and practical support for the research.In the part of quantitative analysis,this paper constructs Internet financial indicators based on the scale of third-party payment and P2 P transactions,and constructs a panel model by selecting the annual data of commercial banks in China from 2009 to 2017.It empirically analyses the impact of Internet Finance on the profitability level,profitability efficiency and profitability structure of commercial banks.Among them,the profitability level reflects the profits of the bank's total assets and major assets.The profitability efficiency reflects the efficiency of the bank to convert costs into revenue.The profitability structure reflects the proportion of non-interest income in the total income of the bank.In the empirical part,this paper further explores the differences of the impact of Internet Finance on different types of commercial banks.Finally,according to the results of theoretical analysis and empirical analysis,the paper draws conclusions and puts forward suggestions.The conclusions drawn in this paper are as follows: First,the development of Internet finance has significantly reduced the profitability of commercial banks,and the degree of impact from large to small is city commercial banks and agricultural commercial banks,joint-stock banks and large banks.The impact of Internet Finance on commercial banks' business has a negative impact on the profitability of commercial banks,which is dominated by interest margin income.Small and medium-sized banks have a smaller and unstable customer base,which has a greater impact,while large banks rely on asset size and customer base and are less adversely affected.Secondly,the development of Internet finance has significantly reduced the profitability efficiency of commercial banks,and the degree of impact from large to small is city commercial banks and agricultural commercial banks,joint-stock banks and large banks.Internet finance has pushed up the interest cost of commercial banks and reduced the interest margin of banks.Small and medium-sized banks are small-scale and poor risk control system,so they are more sensitive to shocks,and their ability to convert costs into revenue will be greatly reduced,while large banks have stronger bargaining power and less negative shocks.Thirdly,the impact of Internet finance has forced commercial banks to diversify their profit structure.The degree of impact from big to small is city commercial banks,agricultural commercial banks,joint-stock banks and large banks.Internet finance forces commercial banks to innovate business models and improve the profit structure,so it has less impact on non-interest business income.The profit of small and medium-sized banks mainly comes from the income of interest margin.The impact on these banks is more pronounced,and their motive force of developing non-interest business is stronger,so the improvement effect of profit structure is more remarkable.This paper attempts to describe the profitability of commercial banks from three aspects: profitability level,profitability structure and profitability efficiency,in order to reflect the impact of Internet Finance on the profitability of commercial banks more comprehensively.In addition,this paper also explores the impact of Internet Finance on the profitability of different types of commercial banks.The paper finally puts forward some suggestions on strengthening the cooperation between commercial banks and Internet financial platforms and strengthening the application of financial technology.