Bond Market Volatility On The Impact Of Commercial Bank Performance Analysis

This paper focuses on the practical situation of Chinese commercial banks, and putsforward some relevant advices of bonds investment for these banks base on bondsmarket fluctuation analysis and its effect on the performance of the commercial banks.About the overview of bonds investment, this paper introduces bond investments,bonds market, the situation of bonds investment business of Chinese commercialbanks and the features of the Inter-bank Bond Market respectively. About bondsmarket fluctuation analysis, empirical analysis are done on the Inter-bank BondMarket using the ARCH models, and empirical results suggest that there existvolatility clustering in the inter-bank bond market and asymmetric effect on ChinaInterbank Bond Index, besides that, the volatility of China Interbank Bond Indexbecause of good news is bigger that bad news. About bonds market fluctuation’seffect on the performance of the commercial banks, this paper first analyze thetransmission mechanism of bonds market fluctuation to the performance of thecommercial banks, then measures the ROA of14Chinese listed banks using the paneldata model, ant the results suggest that China Interbank Bond Index is significantpositive correlated with the ROA of the commercial banks and the proportion of bondis also significant positive correlated with the ROA of the commercial banks.After analyzing, this paper puts forward some relevant advices about the bondinvestment strategies for Chinese commercial banks. Because of the graduallydevelopment of the bonds market, the volatility of bonds market will inevitably moreand more intense. Therefore, all the commercial banks should strengthen riskmanagement ability and focus on bonds investment strategy. In order to improve thebonds investment ability, they should also improve the prediction ability to thefluctuation of bonds market base on all the information.