Inside And Outside Of The Level Of Profitability Of Chinese Commercial Banks In The Determinants Of Research

In recent years,against the background of sustained and rapid macroeconomic growth,China commercial banks reform vigorously and quickly transformed from previous dilapidated situation into a track of good performance regarding asset size and profitability.Faced with continuous improvement of commercial bank profitability,we put forward three key issues of interest:What are the main internal and external factors deciding profits of China commercial banks? Do these Big-five commercial banks have the same profit determinants with other fifteen small and medium-sized ones? Is there a significant interaction relationship between capital and profits in these commercial banks? The aim of this paper is to empirically answer above questions and,if possible,provide guidance for further reforms of China commercial banking-sector.Based on home-and-abroad researches in this area,we construct relevant internal and external indicators and analyze the general mechanism about how these factors impact on the profits of commercial banks.Panel-data models have been employed to exam the specific determinants of profits in overall 20 commercial banks and two different types of banks respectively.We also investigate interaction relationship between capital adequacy and profits in those banks.Our main conclusions are as follow:(1) Asset size and market structure are interrelated and they both have a very important role in deciding the profits of China commercial banks.Market concentration is declining,on the whole,is conducive to commercial banks,especially small and medium-sized banks to improve their profitability.(2) Operational risk, business structures and indirect non-financial costs have a significant impact on banking profits,though they exert different on two types of banks.(3) Economic developments really matter for commercial banks,and foreign strategic investors have a prominent role in affecting profitability of large-scale banks.(4) There is a significant interaction between capital and profits.Well capitalized banks tend to increase profits by enjoying higher credit rating and lower cost of financing. Accordingly,high profits will be used by those banks to enhance their own capital strength.This thesis has some innovations in research framework,methods and perspectives and new findings are luckily derived from our research.Limited to available sample data,we have to set the target of empirical research at 20 main commercial banks from 2000 to 2007.Because of insufficient sample size and the time window,we hope that future researches can be deepened with more data and more advanced methods.