Research on the impact of financial inclusion on the profitability of commercial banks in China

Ge, Chence (2026) Research on the impact of financial inclusion on the profitability of commercial banks in China. In: ESG - RISK MANAGEMENT OR NEW SUSTAINABILITY? Budapesti Gazdaságtudományi Egyetem (BGE), Budapest, pp. 57-69. ISBN 9786156886279

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Abstract

As an important financial tool for promoting economic growth and social equity, inclusive finance has a profound impact on the profitability of commercial banks. Taking Chinese commercial banks as the research object, this paper empirically analyses the mechanism underlying the impact of the proportion of inclusive financial loans on bank profitability, and its dynamic change characteristics, based on relevant data from 2018 to 2023. It is found that the increase in the proportion of inclusive financial loans has a significant negative effect on the return on equity. This finding suggests that inclusive finance remains at a stage characterised by “high input, low return.” In addition, the study reveals the moderating roles of variables such as Loan-to-Deposit Ratio, Provision Coverage Ratio, and Asset-Liability Ratio in the relationship between financial inclusion and profitability, further enriching the theoretical connotations and practical significance of financial inclusion. The paper concludes that commercial banks should optimise their credit structure, enhance their risk management capability, improve financial inclusion product innovation, and balance the relationship between financial inclusion and profitability objectives to ensure the sustainable improvement of profitability while practising social responsibility.

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