Financial Innovation And Construction Of Core Competence Of Banking Industry In Our Country

Banking industry is the core of financial system, developing in innovation has been a necessary way for banking industry to be successful.11 Dec 2006 is the end time of the period of transition for China's entry to WTO. Financial market will be open comprehensively, the close financial environment will no longer exist. Banking industry in our country will not only face the domestic competition but also face the challenge coming from international competitors. Therefore, analyzing the relation between financial innovation and the core competence of banking industry in our country, how to appraise the core competence of banking industry in our country and how to construct the core competence of banking industry through financial innovation not only has important value of theory, but also has vital practical significance to all financial system.In this paper, the author reviewed the research result on financial innovation and bank competence in domestic and abroad first, proposed the connotation of financial innovation on the specific situation in our country, as well as the present situation and exist problems of financial innovation of banking industry. Then the author elaborated the connotation and character of core competence of banking industry in our country, and analyzed the strength, the weakness, as well as the opportunity and the threat under the background of opening financial market. Based on the theory of financial innovation and the core competence of banking industry, the author dissertated the standards to check the core competence of banking industry from three aspects ,such as the condition of capital adequacy, the ability of making profit, the liquidity of capital. Then the influence to core competence by financial innovation was dissertated from the three aspects and the index system was put forward about the core competence of banking industry in our country, This study selected the data of 14 commercial banks in our country and 2 famous banks abroad as samples to do factor analysis. Principal component analysis was used to summarize into four major factors, from the Component-Score Goefficien Matrix we calculated the factor scores and then rank them, got the conclusion and gave the appraisal. Finally, some relevant suggestions on the improvement of the core competence of banking industry in our country was given from financial innovation aspect and reach the conclusion.