An Analysis On Diversification And Performance Of Chinese Commercial Banks

China is in the period of economic transformation. Many corporations begin to engage in diversified management in consider of different aims. Diversification is a very important strategy in corporation. Researches on diversification have important practical significances. Scholars do a lot research on the relation between diversification and performance, but pay little attention to diversification of commercial bank. In financial organ such as commercial bank similarly faces the question of diversification. A lot of evidences show that diversification destroys corporate performance and diversified corporation have poorer performance than Single-segment Corporation, especially for Unrelated-segment Corporation. However, a number of studies have begun to question the evidence connecting diversification to the destruction of corporate performance. These studies show that diversified corporations trade at a significant premium, not a discount. Most of scholars in our country do normal research on diversification. Fewer empirical researches have been done. And there is no consensus on the issue, because the research based on different rationale, method and data.The thesis puts the research under economic transformation in order to reach the core of the problem. The study starts with the survey of the recent literatures and reviews the general principle of diversified management. Then the thesis analyzes the decision making for diversified behaviors of commercial banks as well as the effect of diversified management on the performance from positive and negative side. Reasons of China's commercial bank's diversification in the period of economic transformation are stated emphatically. Next, this thesis carries on empirical analysis on China's commercial bank diversification. Selects 12 commercial banks as the research sample, and does regression analysis on the panel-data. The result indicates: there is a positive correlation between diversification and performance, but the correlation coefficient is not remarkable. The result is linked with the economic transformation period. In economic transformation, the banking industry reforms provide more market opportunities and competitions for banks'development. Diversification is assured and performance has an upward trend. But market opportunity is only one important factor affecting performance. Other factors such as resource, the ability of entrepreneur, will also affect performance. So the correlation is not significant.Meanwhile the thesis analyzed the influence of the specialized degree and the scale of commercial bank to diversification performance. And the conclusion indicates: the diversified management enhances the banks'economical achievements in the state-owned commercial bank, but in the joint stock system commercial bank, there has the possibility to reduce the bank achievements. Finally, some specific advices are given to China's commercial bank about how to implement the diversified management and improve and enhance the commercial bank's performance.