Research On The Heterogeneous Influence Of Internet Finance On The Risk-taking Of Small And Medium-sized Commercial Banks In China

With the dramatic development of China's Internet finance,the traditional financial fields,especially for the small and medium-sized commercial banks,have been strongly impacted.Therefore,it is of great significance to study the impact of Internet finance on the risk-taking of small and medium-sized commercial banks.First of all,this paper analyzes the main characteristics and risks of China's small and medium-sized commercial banks in the background of Internet finance.The first characteristic is that the income from deposit and loan business of China's small and medium-sized commercial banks has a downward trend,which may be the important reason that the development of Internet financial on monetary funds have cut the bank's deposit business.The second characteristic is that the income of intermediary business of China's small and medium-sized commercial banks has an increasing trend,which may be the main crucial reason of the development of mobile banking businesses and retail businesses of banks.The main risks include liquidity risk,credit risk and bankruptcy risk.Due to the different characteristics of risks,the impact of Internet finance on these three types of risks is also different.In addition,this paper reveals the mechanism of Internet finance's impact on the risk-taking of banks by establishing a mathematical model of the relationship between Internet finance and commercial banks.The theoretical analysis shows that Internet finance has two channels to impact to commercial banks:(1)the channel of “dividing the deposit business of commercial banks”,which causes commercial banks to have to take greater risks in order to maintain the original income level;and(2)the channel of“decreasing the management cost of commercial banks”,which makes commercial banks reduce the risk-taking from the spillover effect of Internet finance technology.The impact of Internet finance on the risk-taking of commercial banks ultimately depends on the combined effects of the above two channels.Next,this paper uses the dynamic panel model with Generalized Method of Moments(GMM)to study the relationship between Internet finance and China's small and medium-sized commercial banks,through the empirical analysis on the panel date of 23 listed banksfrom the first quarter of 2013 to the fourth quarter of 2017.The results show: firstly,Internet finance overall reduces the risk-taking of commercial banks,with a regression coefficient of-0.0127,which means,for the risk-taking of small and medium-sized commercial banks,the reducing effect of Internet Finance is significantly greater than the aggravating effect,that is,a positive impact from the influence of Internet finance;secondly,the impact of Internet finance on the risk-taking of small and medium-sized commercial banks in China is heterogeneous due to different types of commercial banks.Internet finance will reduce the risk-taking of both joint-stock commercial banks and urban commercial banks,with the regression coefficient of-0.0127~-0.0205 and-0.00789~-0.0152,which shows the influence on joint-stock commercial banks are more sensitive than city commercial banks;thirdly,a further group comparison shows that the impact of Internet finance on the risk-taking of large commercial banks and joint-stock commercial banks are significantly greater than urban commercial banks.Furthermore,this paper uses panel Granger causality test to empirically analyze the mechanism of the two channels.In the end,this paper puts forward the policy recommendations by weakening the channel of “dividing the deposit business” and strengthening the channel of “reducing management cost” based on the above empirical results.