Research On The Influence Of Internet Finance On Risk-taking Of Commercial Banks In China

The explosion increase of Internet finance has exerted significant impacts on bank risk-taking behavior at home and abroad,it’s against this background that it’s of great significance to study how risk-taking behavior of banking is affected and whether bank risk-taking behavior shows heterogeneity in the face of shocks from Internet finance.Firstly,this article look back on the literature of the influence on Internet finance on banks.Secondly,it analyzes the mechanism of how Internet finance exerts effects on bank risk-taking,then deduces that the mechanism of Internet finance affects bank risk-taking by changing the structure of deposits and raising cost of capital,hence it provides important theoretical guidance and reference for the research of this paper.Then on the basis of the second chapter,the paper centers on the status quo of Internet finance in China and its impact on the mechanism of bank risk-taking.From the perspective of Internet finance’s definition and its four financial functions,the author uses both text mining method and Baidu index method to build a comprehensive development index of Internet finance and select 20 commercial banks as samples,and build models with multilevel mediation effects for empirical test.The results show that:(1)The explosion increase of Internet finance has exacerbate market competition in China,which forces banks to be willing to undertake riskier loan projects,thus,leading to greater risk taking.(2)Internet finance brings higher risks to banks by changing the structure of deposits and raising cost of capital.(3)The response of banks’ risk-taking is heterogeneous.In other words,bank risk-taking has different performance under the impact of Internet finance.for example,it has agreater influence on large state-owned commercial banks than joint-stock banks,and the smallest impact on urban commercial banks.Finally,on the basis of above research results and considering the current situation of our country,the author suggests that regulators should put more efforts to strengthen their management and keep Internet finance moving on in a standard way,so that risk-taking by banks will be reduced.Bank managers should optimize the structure of bank deposit and reduce their cost of capital,etc.From these two aspects,the author puts forward some suggestions and hopes to provide reference and theoretical guidance for decision-makers and bank managers,so as to promote healthier development of both bank and financial industries.