The Impact of Internet Finance on the Profit Efficiency of Commercial Banks: Theory and Evidence From China

According to the reality of China, we divide Internet finance into four parts as Internet payment services, Internet financing services, Internet financial management services, and online banking business of traditional commercial banks, to discuss the impact of Internet finance on the profit efficiency of commercial banks. Our theoretical analysis shows that the external impact of Internet finance will reduce the profit of commercial banks, but Internet financing and Internet financial management have less influence, and the financial Internet business can improve the profit efficiency of commercial banks to some extent. An empirical test of Chinese data provides support for these predictions, it suggests that the estimated impact is significant and robust. Furthermore, differences in ownerships and profit efficiency of commercial banks will be at work.