Factor Analysis On The Realistic Competitiveness Of The Domestic Listed Commercial Banks

These years, China's banking industry has involved into the reform and gained greatdevelopment. However, there is still rather a big difference between Chinesecommercial banks and those in the developed country. After China's entry into WorldTrade Organization, we are faced with the situation of complete opening-up and theera of competition. In order to win in the furious competition, the banks must seize theopportunity and meet the challenge to strengthen their competitive power. So it is vitalto make objective analysis and evaluation on the recent competitive situation of thebanks.In order to avoid the subjectivity of the index system method, this article, based on thestatistics from the annual financial reports from 2002 to 2005 of Listed CommercialBanks in Shanghai and Shenzhen Stock Exchange, implements factor analysis, andall the data is calculated by SPSS 11.5 software. This study selects four-year data ofChina Minsheng Bank, China Merchant Bank, Shanghai Pudong Development Bank,Huaxia Bank and Shenzhen Development Bank as samples and reflects the realisticcompetitiveness situation of them by factor analysis method.Principal component analysis is used to summarize nine indicators into three majorfactors: 1) Profitability Factor, which is mainly reflected by Return on Net Asset,Return on Capital, Interest Collection Ratio and Bad Loan Ratio;2) Asset QualityFactor, including Asset Utilization Rate, Capital Adequacy Ratio and Asset Growthrate;3) Liquidity Factor, mainly reflected by Deposit-Loan Ratio and Cash-Asset Ratio.From the Component Score Coefficient Matrix, we get three major factor expressions,calculate the factor scores and then rank them. After that, this article analyzes therealistic competitiveness of the Domestic Listed Commercial Banks, makes detailedcomparison between the advantage and the disadvantage of them, and reaches theconclusion.