The Effect Research Between Non-interest Income Structure And Performance Of Listed Commercial Banks In China

Since the1970s, the government has relaxed the financial control, and the financial environment has undergone great changes. With the development and the application of financial technology, it is competitive in the banking industry. The west bank gradually focused on adjusting the income structure of commercial banks because of the pressure of the tightening interest margin. With the deepening of reform and opening up and financial reform, China set up banks with different functions, including policy banks, large commercial banks, small and medium commercial banks, rural financial institutions and so on. Chinese banking explored the domestic mode of operating according to the specific circumstances. On the one hand, more and more foreign banks entered the Chinese market since accession to the WTO. On the other hand, domestic non-bank financial institutions begin to rise and develop, especially in recent years by financial disintermediation and other factors, Chinese commercial banks realized the necessity and importance of the adjustment of banks’income structure. However, the various components of the non-interest income, whether it can improve bank performance, there is few foreign literature. And the research is about the relationship between non-interest income and bank performance, but has not yet come to a unanimous conclusion. The domestic banks view spread income as the main source of income, the scholars all analyzed from the perspective of the income structure of banks. So I think it is necessary to study the effect of the non-interest income structure on bank performance. The conclusions will be benefit to adjust and optimize the bank’s non-interest income structure.This paper introduces the theoretical basis of non-interest income and intrinsic motivation from the perspective of diversification, financial innovation, economies of scope, and sort out the domestic and international research literature. It summarized the foreign literature from two angles, the positive and negative impacts of non-interest income on bank performance. The study of domestic banking started late, and there is no unified point of view. Then, this paper defined the concept of non-interest income, and subdivided into fee and commission income, investment income, foreign exchange and foreign exchange products revenue and other operating income as explanatory variables. According to the economic date of banks, this paper introduced the characteristics of non-interest income, and made an overview of the development of non-interest income of banks in China. Finally, it introduced some bank performance measures, including the evaluation of the financial indicators, EVA evaluation method, the operational efficiency evaluation method and the balanced scorecard evaluation. This paper selected the financial indicators evaluation method, the net profit margin, returns on total assets, returns on net assets as explanatory variables.The empirical part selected the data of the listed commercial banks in1996-2010as the study sample. Based on panel data analysis, this paper used regression analysis to study the impact of non-interest income structure on bank performance. The result shows that each component of non-interest income has a positive effect to the performance of state-owned banks and regression coefficients were higher than the joint-stock banks. Only the proportion of fee and commission income has positive effect on bank performance, other components have negative effect on bank performance. It needs to adjust the non-interest income structure and improve the level of risk control. The different empirical results between state-owned banks and joint-stock banks, is mainly due to the processes of expanding non-interest income business will bring a substantial increase in operating expenses. Compared to state-owned banks, the huge operating expenses will become a bottleneck in the development. Therefore, the bank should optimize the structure of non-interest income, and focus on the introduction and cultivation of talent, improve the level of risk control in order to get effective growth.Finally, this paper put forward suggestions about how to develop non-interest income business, such as the bank should develop advantage business based on its own virtue. Then, this paper proposes a direction for future research according to the shortcoming of sample selection and research methods.