Research On The Impact Of Financial Innovation On The Fragility Level Of Chinese Commercial Banks

In this study,16 highly representative listed banks in the banking industry are selected as samples,and the principal component analysis method is used to construct the fragility index of 16 banks.This paper analyzes the impact of financial innovation on the fragility level of banks from two aspects: financial instrument innovation and financial technology innovation.On the basis of the research hypothesis,the author put forward the selection of financial instrument innovation variables: fee and commission income ratio,cost-to-income ratio,and the selection of financial technology innovation variables: mobile banking users.By using the macroscopic and microscopic selecting money supply growth rate,the GDP growth rate and bank scale as control variables,the empirical study of financial innovation influence on bank fragility is conducted.The results are as follows:First,the fragility level of our country commercial banks presents a rising trend year by year;the differences of fragility level among 16 banks are huge;the fragility level of large commercial banks had been the lowest before 2014 and well below the average industry,but since 2014,the fragility level of the big commercial banks had been higher than the small and medium-sized commercial banks,and the tend to be rising.Second,the innovation of financial instruments has increased the fragility of commercial banks.For every 1 percent increase in the proportion of banks' fees and commissions income ratio,the fragility level of banks will increase by 0.31 percent.Due to the heterogeneity of bank's size,the impact of bank financial instrument innovation on its own fragility is not consistent.The impact of financial instrument innovation on bank fragility of large commercial banks is greater than that of small and medium-sized commercial banks.Third,financial technology innovation has weakened the fragility level of commercial banks.For every 1 percent increase in the number of mobile banking customers,the bank's fragility level decreases by 0.4percent.Moreover,the impact of financial technology innovation of large commercial banks on the bank fragility is still greater than that of small and medium-sized commercial banks.In summary,as the impact coefficient of financial technologyinnovation on bank fragility is greater than that of financial instrument innovation on bank fragility,and overall financial innovation reduces the fragility level of banks.Moreover,the larger the scale of banks is,the more obvious the weakening effect of financial innovation on the fragility of banks is.Therefore,commercial banks should combine with the characteristics of scale heterogeneity in order to improve the service level of differentiated innovation,reduce their own fragility,and maintain the stability of bank operation;commercial banks should integrate various innovation elements and implement the strategy of innovation-driven development;meanwhile,commercial banks should increase the investment in financial technology so as to enhance the competitiveness of banks.