Research On The Impact Of Financial Disintermediation On The Profitability Of China's Commercial Banks

Under the background of the era when the Chinese economy entered a new normal,supply-side reforms have achieved fruitful results,the capital market has become diversified,and it took only 7 years for Internet finance to start and develop vigorously.The phenomenon that monetary funds bypass the traditional financial intermediary and circulate directly between the two sides of the transaction is becoming more and more prominent.This phenomenon is called “ financial disintermediation ” commercial banks have always maintained their dominant position in China's financial market.Therefore,it is the first to face the impact and challenge of "financial disintermediation".Is this trend a blow or an opportunity for commercial banks? How should commercial banks deal with and continue to maintain their strong profitability? This is a subject worthy of further study.First of all,this paper summarizes a series of literature about financial disintermediation,commercial banks' profitability and the influence of financial disintermediation on commercial banks' profitability,and also extracts the theoretical basis of this paper,including commercial banks' profitability financial intermediary theory,andfinancial disintermediation theory theory;Then it uses the current situation description and data indicators to analyze the profitability of commercial banks in China and the development trend of "financial disintermediation" in China.In addition,it also explores many influence paths of financial disintermediation on the profitability of commercial banks from the theoretical level.In the empirical part,this paper collects panel data of 19 banks in the past 13 years to build a multiple regression model,and creatively divides the selection of disintermediation indicators into two levels: broad and narrow,and draws the conclusion: direct financing and bank asset-side disintermediation have a negative impact on the profitability of commercial banks,which can be explained as direct financing deprives commercial banks of high-quality customer resources and reduces traditional business income,theoutflow of bank loans from bank asset pool reduces the scale of loan interest income;The influence of the disintermediation and correction effect on the profitability of the bank's debt side is positive,which can be explained by the fact that that the reduction of the bank's deposit ratio has not only not reduced its profit source,but also promoted the bank to expand other businesses,break the development bottleneck and find new sources of profit.Under the corrective effect,the proportion of the bank's non-interest income increases,the types of intermediate business increase,and the scale also expands,which ensures the sustainable development of the bank's profits.Then,taking ICBC as an example,this paper analyzes the impact of financial disintermediation on the profitability of ICBC from the perspective of the current profitability of ICBC,combining with the business composition and income proportion,and summarizes a series of transformation measures taken by ICBC to cope with financial disintermediation,including credit layout,business transformation and risk management,so as to provide enlightenment for the next chapter.Finally,with reference to the empirical conclusions,this paper gives some suggestions on the future commercial banks to deal with the financial disintermediation and improve the profitability of traditional business and intermediary business operation,macroeconomic analysis ability,risk management and technological innovation.