Research On The Influence Of Internet Finance On Bank Profitability

Under the continuous development of the domestic economy,the rapid development of e-commerce and network technology,and the imperfect regulatory system,there is a certain blind spot of traditional financial service has attracted public attention,which does not cover small and medium-sized customers,resulting in the emergence of a new model of Internet + finance.Financial services are becoming a core force behind Banks in promoting economic development,such as third-party payment,P2 P lending,big data finance,crowdfunding,information-based financial institutions,and Internet financial portals have emerged in an endless stream.As a combination of network technology and traditional finance,Internet financial are using big data,cloud computing,and information technology,which has advantages of low cost and high transparency.Therefore,those advantages of internet financial with convenient payment were popular with the customers,and thus has gradually formed the characteristics of their financial services on the open Internet.They make up the vacancy of the traditional financial business,and also have gradually integrated the traditional financial business.In order to help traditional Banks to promote transformation,the action will be done through updated products and services,which leads to consolidate their market position and has shaken the core status in the financial markets.After such a shock,it will be a topic about the impact of Internet finance on Banks and the responds of Banks.Under those backgrounds,this article analyzes the impact of Internet finance on the profitability of commercial Banks.The article discusses the connotation,current situation of the development of the Internet financial and commercial Banks,and the profit model between financial and commercial Banks.Those discussions are based on the theory of financial intermediary,the long tail theory,platform of economic theory and analyses the business influence of the Internet financial Banks to commercial Banks.Besides,the reasons of the bank transformation and business model of the bank after the transformation were analyzed.Meanwhile,it is proposed that the financial internet has a different negative impact on numerous and various Banks on profitability.Base on the basis of theory,this article has carried on the empirical research,which has selected the10 listed Banks in China panel data and index data,and those data associated with the Internet financial development from 2009 to 2018.Also,return on assets(ROA)will be regarded as a measure of bank profitability indicators.Besides,user scale index of online banks,online payment,online banking and online shopping were selected,and those could combine with the entropy value method to quantify the development of the Internet financial.Those combinations of data could be a reference as internet financial index.The panel model is selected in this dissertation,and the test method of that is one of the important contents of modern Econometrics.First,the stationarity of the data is verified by unit root test,and the stationarity of estimated model is estimated by co-integration test.Secondly,the least square estimation is used to estimate the model.Finally,the fixed effects panel model is selected through the Hausman test and F test,and the correlation coefficient of model variables is analyzed to verify the negative impact of Internet finance on the profitability of Banks.Meanwhile,the impact of Internet finance on the profitability of different types of Banks is discussed.At the end of the article,there are some strategies that be proposed so as to improve the profitability of commercial Banks.For example,Banks should do more internet-based business,and try to enter the market of small and micro businesses.As for the government,they should strengthen the supervision of Internet finance.Admittedly,these ways can lead to a win-win situation between Internet finance and commercial Bank.