An Empirical Study On The Development Of Intermediary Business Of Commercial Banks In China And Its Impact On Bank Performance

Asset, liability and intermediary business have always been the three main sources of profits for commercial banks. Asset and liability have been the priority of commercial banks since the beginning while intermediary business has not gained ground until the 1980 s. In recent years, with the volatile changes of the financial market and great developments of the domestic markets, information has become more and more transparent. The demander and supplier for capital begin to finance directly bypassing intermediary institutions like commercial banks, which means there are more and more means for direct financing. Moreover, with the marketization of interest rate speeding up, profit margins earned by spreads are shrinking. Besides, the market now has more foreign banks coming in, seizing market shares against domestic commercial banks. Especially in the past two years, the internet finance is growing so rapidly that the scale of Tian Hong Fund under Ali Pay shot up to 250 bn yuan with 49 m registered users within just several months.P2P platforms have also sprung up. The fast-growing internet finance has seriously encroached the savings and loan business which is almost all what the commercial banks live on. Due to these factors, the ratio of interest income over operating income has dropped greatly. Therefore, in order to increase the income and sustain the market share, commercial banks need to count on the further development of its intermediary business.This essay starts with the related conceptions and determinations of commercial banks’ intermediary business, whose characteristics and significance are then introduced. After analyzing factors that may influence the intermediary business, a regression empirical study on possible problems that exist in the development of commercial banks’ intermediary business is launched. Then, some recommendations are put forward, hoping to make some contributions in promoting the development and its competitiveness of the intermediary business for commercial banks.