Impact of Third-Party Payment on Banks Risk-taking Capacity and Empirical Analysis

Third parties have provided people with a lot of convenience through the rapid development of Internet technology. In the meantime, commercial banks will face significant disruption from the characteristics of third-party payments, which include low operating costs and high settlement efficiency, as the Internet financial platform evolves. This articles goal is to conduct an empirical analysis of how third-party payments affect commercial banks ability to take on risk by using imbalanced panel data from 36 listed banks between the first quarters of 2013 and the first quarter of 2021. The results show that: (1) the third-party payment significantly increases commercial banks ability to take on risk. (2) third-party payment increases the risk-taking capacity of non-state-owned banks compared to state-owned banks. (3) third-party payment decreases bank profitability and raises bank credit risk, which impacts commercial banks ability to take on more risk. Based on the above conclusions, this paper puts forward some meaningful suggestions to the relevant regulatory agencies and commercial banks.