Research on the Regional Impact of Digital Inclusive Finance Development on the Profitability of Commercial Banks

DOI

10.2991/978-94-6463-835-6_86How to use a DOI?

Keywords

Digital finance; Profitability of commercial banks; Digital inclusive finance index; Fixed-effect model; Heterogeneity analysis

Abstract

Based on panel data from 42 listed commercial banks in China from 2011 to 2023, this paper empirically analyzes the impact of digital finance on the profitability of commercial banks using a two-way fixed effects model. With return on total assets (ROA) as the explained variable, the digital inclusive finance index as the core explanatory variable, and controlling for factors such as capital adequacy ratio, bank size, loan-to-deposit ratio and non-performing loan ratio. The study found that the development of digital finance has a significant negative impact on the profitability of commercial banks. For every 1-unit increase in the digital inclusive finance index, ROA drops by approximately 0.17 percent, and this effect is particularly significant in public banks and the eastern region. The capital adequacy ratio and the loan-to-deposit ratio have a positive effect on profitability, while the non-performing loan ratio significantly suppresses profitability. Heterogeneity analysis shows that state-owned banks are less sensitive to digital financial shocks, while the impact in the central and western regions fails to pass the significance test due to insufficient penetration of inclusive finance. The robustness test verified the reliability of the conclusion by replacing the explained variable (ROE) with the lag model. Based on this, it is recommended that commercial banks deepen digital transformation to optimize operational efficiency, improve capital replenishment and risk management mechanisms, and adopt differentiated strategies to address the challenges of regional and attribute heterogeneity.

Copyright

© 2025 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Shuolei Wu
AU  - Xinrui Ma
PY  - 2025
DA  - 2025/09/17
TI  - Research on the Regional Impact of Digital Inclusive Finance Development on the Profitability of Commercial Banks
BT  - Proceedings of the 2025 3rd International Academic Conference on Management Innovation and Economic Development (MIED 2025)
PB  - Atlantis Press
SP  - 820
EP  - 831
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-835-6_86
DO  - 10.2991/978-94-6463-835-6_86
ID  - Wu2025
ER  -