The Research Of Chinese Commearcial Banks' Profitability

With the development of economic globalization, the global banking was faceing severe challenge now and entered a new transformation period. From the overall opening of the China financial system in the end of 2006, the domestic banking facing increased competition both in foreign and at home. So if the Chinese Commercial Banks want keep an invincible position in intense market competitions and realize the sustainable development they must improve management efficiency and profitability. This paper has selected the sample date and related index from 14 commercial banks in the 2002-2007 , using statistical analysis method and principal component analysis method to analysis and evaluation those banks ' profitability. And using panel data multiple regression method to research the influence factors of those banks ' profitability. On this basis to supply some suggestions and find out the ways to improve Chinese Commercial Banks' profitability and competitiveness, to make them keep an invincible position in th international competition.There are five parts of this paper.The first part is introduction. This part briefly introduces the present situation and challenge of Chinese Commercial Bank. To explain the importance of study on the bank's profitability.The second part is research summary. This part include two sections, the literature review of study on the bank's competitiveness and profitability. The former is mainly about the bank's competitiveness but profitability as an core competence also has researched. The latter is mainly about the bank's profitability include evaluation index system and influence factors.The third part is the analysis of bank's profitability. This part mainly use statistical analysis method to analysis those index which can reflect the bank's profitability. Through the line graph to show the changing trend of every index and to understanding the situation of every index in every bank. Then use principal component analysis method to study the sample date and related index. Calculating and ranking those commercial banks' profitability to show the general level and changing trend.The fourth part is the research on the influence factors of banks ' profitability. Including normative analysis and empirical analysis. The normative analysis mainly about which factors makes influence on the banks' profitability. The empirical analysis chosen partly influence factors index and using panel data multiple regression method to study those factors.The fifth part is conclusion. According to the analysis we can see that all of Chinese Commercial Banks lacks predominant competitive advantage. And the profitability is the core of bank's competitiveness, so Chinese commercial banks must consist improve those profitability and competitiveness. In the research of influence factors of those banks ' profitability, liability-asset ratio(LAR) is negatively correlated with profitability. ZA is positively correlated with state-owned commercial banks profitability and the contribution degree is high(ratio:1.214532). ZA is negatively correlated with joint-stock banks profitability but the contribution degree is relatively small(ratio:0.394370).MI is negatively correlated with state-owned commercial banks' profitability, and positively correlated with joint-stock banks' profitability. So in the Chinese commerical bank market must avoid form the oligopoly when improve the scale of banks. BLD is negatively correlated with profitability, FLS is positively correlated with profitability, both of consistent with mainstream theories.This paper through the research of Chinese commercial banks' profitability analyzed the present situation of Chinese commercial banks' profitability and made an empirical analysis on the part of influence factors of those banks ' profitability. And those provide the basis for Chinese commercial banks further improve those profitability. This paper's innovative points and conclusions had following characteristics. First, divided the samples into two groups that is four state-owned commercial banks and ten joint-stock banks then made statistical analysis and empirical analysis. Through analysis not only study the respective characteristics but also comprehensive consideration Chinese commercial banks' common characteristics. So the study conclusions have reference meanings both to state-owned commercial banks and ten joint-stock banks. Second, using principal component analysis method to analysis and evaluation those banks ' profitability. According to the comprehensive scores ranking those banks get conclusion that all of Chinese commercial banks lacks predominant profitability advantage. At last, through empirical analysis concluded that the main reason cause MI negatively correlated with state-owned commercial banks' profitability and positively correlated with joint-stock banks' profitability is the oligarchic monopoly market structure of Chinese banking industry. And such market structure blocked development of Chinese banking industry. So China must improve the fair competition and efficiency in the banking market.