Impact of internet finance on the performance of commercial banks in China

Jichang Dong, Lijun Yin, Xiaoting Liu, Meiting Hu, Xiuting Li and Lei Liu

International Review of Financial Analysis, 2020, vol. 72, issue C

Abstract: The rapid development of Internet finance has certainly affected the operation of commercial banks. This paper investigates the impact of Internet finance on commercial banks. First, a theoretical influence mechanism of Internet finance on commercial banks is explored, and the Internet finance index and integrated performance index of commercial banks are constructed using factor analysis. Then, a static panel and a dynamic panel model are established to empirically examine the impact of Internet finance on the profitability, security, liquidity and growth as well as the comprehensive business performance of commercial banks. Finally, the heterogenous impacts of Internet finance on city commercial banks, joint-stock banks and state-owned commercial banks are discussed. The results show that the development of Internet finance has a positive impact on the profitability, security and growth of commercial banks, and has a negative impact on the liquidity of commercial banks. In addition, Internet finance has promoted the improvement of the comprehensive business performance of commercial banks. Moreover, the impact of Internet finance on different types of commercial banks is heterogeneous with the impact on state-owned commercial banks being the weakest and the impact on city commercial banks is the most significant.

Keywords: Internet finance; Commercial banks; Performance; GMM; Heterogeneity (search for similar items in EconPapers)
JEL-codes: G20 O33 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1057521920302234
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:72:y:2020:i:c:s1057521920302234

DOI: 10.1016/j.irfa.2020.101579

Access Statistics for this article

International Review of Financial Analysis is currently edited by B.M. Lucey

More articles in International Review of Financial Analysis from Elsevier
Bibliographic data for series maintained by Catherine Liu ().