The Research On Influence Of Digital Inclusive Finance On The Asset Quality Of Banks

In the financial market of China,indirect financing is the dominant mode.Therefore,the quality risk of bank credit assets should be a major concern for financial risks.The government,financial institutions,and consumers all pay close attention to the quality of bank credit assets,especially non-performing loans.The development of digital inclusive finance may provide new ideas and inspirations for addressing the issue of bank credit asset quality.Due to its significant contributions in improving the efficiency of financial services and promoting fair resource allocation over recent years,people have begun to consider whether digital inclusive finance can play a role in mitigating the credit asset quality risks faced by banks.This thesis uses provincial panel data from 2011 to 2020 as a sample to empirically analyze the impact of digital inclusive finance on bank credit asset quality in China.After verifying the panel data’s two-way fixed effects and threshold regression effects,it was found that the development of digital inclusive finance plays an important role in promoting the overall improvement of China’s bank credit asset quality.The total index of digital inclusive finance,depth of usage dimension index,and degree of digitization dimension index all contribute positively to the promotion of bank credit asset quality,and are significant at the 1%level.However,this effect is nonlinear and has a double-threshold effect.Before achieving the first threshold value,the development of digital inclusive finance can significantly improve the quality of bank credit,but when the level of digital inclusive finance development is between the first and second threshold values,an increase in the level of digital inclusive finance will instead increase the non-performing loan ratio of banks.Once the development of digital inclusive finance has Exceeded the second threshold value,it can once again have a positive impact on improving bank credit quality.At the same time,this thesis also found that the mechanism of this impact involves an intermediary effect: the development of digital inclusive finance(including services and products)intensifies competition among banks,and this competition among banks can improve their own credit quality to a certain extent.That is,inter-bank competition plays an intermediary role in the impact mechanism of digital inclusive finance on improving credit asset quality.Due to the relatively short development time of digital inclusive finance compared to the banking industry,as well as the imbalanced characteristics of China’s vast financial market space,this thesis also conducted heterogeneity analysis on the sample data.The results show that using quantile regression model,the impact of digital inclusive finance on the non-performing loan ratio of banks presents an "inverted U" shape.For areas with lower credit asset quality,the improvement effect of digital inclusive finance is most significant,while the effect is weakest for areas at the 0.5 percentile of credit asset quality,and then gradually strengthens with the increase of percentiles.At the same time,based on regional heterogeneity,this thesis found that the improvement effect of digital inclusive finance on bank credit asset quality is best in the eastern region,followed by the central region.This thesis provides reference suggestions for the digital transformation of China’s banking and financial institutions through theoretical analysis and empirical research.It also offers policy recommendations for the government to use digital technology to empower the financial market and prevent financial risks.