"Journal of Humanities, Arts and Social Science" Article Recommendation: The Surge of Digital Finance: A Crossroads for Bank Systemic Risk

In today’s world, rapid technological advancements are driving profound transformations across various fields. Digital finance, as an emerging realm, has become an unstoppable force, vigorously reshaping the global financial industry landscape. While it brings unprecedented opportunities for bank systems, is it also quietly giving rise to potential risks? 

Website screenshot

Frontier Exploration by Cornell Scholar: Research on the Impact of Digital Finance on Bank Systemic Risk

In the article Research on the Impact of Digital Finance on Bank Systemic Risk published in the Journal of Humanities, Arts and Social Science, Cornell University scholar Yuanhao Huang employs rigorous academic research methodologies to shed light on the relationship between digital finance and bank systemic risk.

The Double-Edged Sword of Digital Finance: Opportunities and Challenges

The article delves into the thriving trend of digital finance. With the deep application of cutting-edge technologies such as the internet, big data, and artificial intelligence in the financial sector, digital finance has shown vigorous vitality. On the one hand, internet finance companies, leveraging technological innovation and efficient services, have quickly captured market share, causing traditional banks’ market portions to be severely squeezed. On the other hand, the rise of digital finance has also brought a once-in-a-lifetime opportunity for the transformation and upgrading of traditional banks.

The Multifaceted Nature of Risk: Financial Disintermediation, Intensified Competition, and Risk Contagion

The study also reveals the complex impacts brought about by the development of digital finance. The vigorous rise of digital finance has exacerbated the phenomenon of financial disintermediation. Internet finance companies, with their unique advantages, have gradually weakened the core position of banks in the financial intermediary system, thereby triggering issues such as bank deposit outflows and narrowing interest rate spreads. At the same time, the competitive landscape of the financial industry has undergone profound changes. Internet finance companies, with their convenient and innovative services, have attracted a large customer base, bringing unprecedented competitive pressure to traditional banks. In addition, risk contagion has become a potential threat that cannot be overlooked.

The Value of Academic Research and Suggestions: Balancing Regulation, Innovation, and Risk

This study, through in-depth and detailed analysis, offers a new perspective for the academic and industrial circles to understand the complexity of bank systemic risks in the digital finance era. The article suggests that regulatory bodies should strengthen prudential regulation of internet finance companies while encouraging orderly financial innovation, continuously improving risk management frameworks to ensure the stability and security of the financial system. As for banks, they must actively respond to the numerous challenges posed by digital finance, fully leverage the advantages of digital financial technologies, continuously optimize risk management strategies, and enhance operational efficiency comprehensively.

# Digital finance # Bank systemic risk # Fintech # Financial regulation # Financial innovation

The study was published in Journal of Humanities, Arts and Social Science, Hill Publishing Group

https://www.hillpublisher.com/ArticleDetails/4698    

How to cite this paper

Yuanhao Huang. (2025) Research on the Impact of Digital Finance on Bank Systemic Risk. Journal of Humanities, Arts and Social Science, 9(4), 677-682.

DOI: http://dx.doi.org/10.26855/jhass.2025.04.002