The Impact Of Digital Finance On Risk-taking Of Chinese Commercial Banks

With the in-depth integration of innovative digital information technology and the financial industry,digital finance has gradually entered the stage of rapid development,which has also played a different role in the development of traditional financial institutions.Commercial banks are a key part of China’s traditional financial institutions.All aspects of the development process are affected by digital finance.The development of digital finance is booming.On the one hand,through the use of high-tech information technology,optimize and upgrade the business model,broaden the channels of capital sources,improve business efficiency,reduce the degree of information asymmetry and improve the ability of risk management and control;On the other hand,it has impacted the business of commercial banks on the asset side and liability side,crowding out market share,resulting in the rise of capital cost,the reduction of deposit and loan interest margin and other adverse effects.In order to resist the impact of digital finance,commercial banks change their business model and innovate their business philosophy,which will inevitably affect the bank’s risk-taking.In this context,what is the relationship between digital finance and the risk-taking of China’s commercial banks? What is the path through which the impact is transmitted? Furthermore,will digital finance have the same effect on the risk-taking of different types of commercial banks? The discussion of the above problems can promote the stable development of digital finance and commercial banks,make finance better provide good market conditions for the real economy,and thus ensure the stability of China’s financial market,which is of great significance from the perspective of theory and reality.Therefore,this paper theoretically analyzes the relationship between digital finance and risk-taking of commercial banks,and tests it from an empirical perspective.Firstly,this paper sorts out the relevant literature,defines the concepts of digital finance and bank risk-taking and expounds their relevant theoretical basis,then analyzes the role of digital Finance on commercial bank risk-taking from a theoretical perspective,deeply analyzes the transmission path of its impact,puts forward the intermediary role of profitability and credit risk quality in the transmission path,and describes the current reality of the two.Secondly,it verifies the theoretical elaboration of its impact from an empirical perspective,selects the annual data of 66 commercial banks in China from 2011 to 2020 for empirical analysis,and uses the intermediary effect model to test whether the intermediary effect of the transmission path is established.Finally,according to the above results,this paper draws the conclusion,further expounds the countermeasures and suggestions,and expresses the research prospect according to the insufficient places of this study.The conclusions of this paper are as follows:(1)the development of digital finance increases the risk-taking of banks.The development of digital finance has impacted the business of commercial banks,diverted funds and occupied market share,thus raising the cost of funds,leading to the offset between the profits obtained by commercial banks’ loans and the cost of funds,and the reduction of the bank’s operating profits.In order to reduce the loss of profits,commercial banks will change their attitude towards risk and increase their risk-taking.(2)From the result of adjustment effect,monetary policy has a negative adjustment effect on the relationship between digital finance and bank risk-taking.Tightening monetary policy will reduce the negative impact on banks’ risk-taking,which means that the negative impact of digital Finance on commercial banks has been improved to some extent.(3)For different types of banks,the development of digital finance intensifies the risk-taking of urban commercial banks,but reduces the risk-taking of state-owned banks,joint-stock commercial banks and rural commercial banks,with the least impact on rural commercial banks.(4)The empirical test results of the traditional path show that digital finance can improve bank risk-taking by reducing the profitability of commercial banks,and some intermediary effects are established.During the development of digital finance,commercial banks’ profits will be reduced,which will encourage banks to change their attitude towards risk and increase their risk-taking;The development of digital finance makes it difficult to distinguish the authenticity of data information,which makes it impossible to accurately control the credit quality,which increases the credit risk and finally intensifies the risk-taking of banks.According to the research conclusion of this paper,in order to promote the stable development of digital finance and China’s commercial banks,this paper puts forward the following countermeasures:(1)the regulatory authorities should strengthen management and standardize the development of digital finance.We should improve the construction of laws and regulations,adjust relevant laws and regulations that are not applicable,supplement and expand the deficiencies of relevant laws,and strengthen departmental unity to realize linkage supervision.(2)Commercial banks should be based on their advantages and actively meet challenges.First,banks should effectively identify the risks behind digital finance and prevent financial risks.Second,we should use digital information technology to strengthen our own risk prevention and control ability.Third,we should find a development route suitable for the bank’s own characteristics.