Research on Financial Technology, Inclusive Loans and Bank Risks in China

Based on analysis of current situations of commercial banks’ financial technology investment, scale of inclusive loans and bank risks, this paper makes a detailed analysis on the effect of financial technology on improving the condition that inclusive loans increase bank risks. There are several findings in this paper. Firstly, investment on financial technology is increasing in Chinese commercial banks. Secondly, the scale of inclusive loans is increasing. Thirdly, there is a negative relationship between the investment on financial technology and bank risks. In addition, in view of the facts that most of inclusive loans of commercial banks is concentrated in state-owned banks, the scale of inclusive loans of other bank types is relatively limited, the increase of inclusive loans leads to the increase of bank risks, commercial banks with less financial technology investment have higher risks. This paper proposes suggestions including but not limited to, increase support for joint-stock commercial banks, city banks and other types of banks to develop inclusive loans; increase contacts with clients to help banks to reduce information asymmetry; create more innovative, reasonably priced and low cost financing models to reduce marginal costs; increase commercial banks’ investment in technology to reduce bank risks. All of these will certainly have much practical significance for promoting the development of inclusive loans business in commercial banks.