Research On Performance And Influencing Factors Of China’s Small And Medium Banks

A perfect banking system means not only types of banks, but also a certain scalehierarchy. In china, small and medium commercial banks are the important parts ofthe banking system and complements to large banking institutions. They also play anincreasingly important role in the national economy. However, due to deficiencies andmany other factors, there are some salient problems in their operating developmentwhich affect the sustainable development of small and medium banks. Evaluating thebusiness performance of China’s small and medium banks in comprehensively andanalysing the internal and external factors have important theoretical value andpractical significance.Firstly, the paper defines the scope of small and medium banks. we describe thetheoretical basis for the development of small and medium banks and analyze thechina’s small and medium banks’ regional distribution, operating conditions, existingproblems and the new situation they are facing. Secondly, the paper establishes abusiness performance evaluation index system which covers four aspects—thecapacity of growth and development, profitability and asset quality, operatingcapacity and capital adequacy ratio. Then, we analyse samples of21banks and use themethod of factor analysis to evaluate the comprehensive level of China’s small andmedium bank’s business performance. The results show that the capacity of growthand development has a greater impact on the samples’ operating performance, and theother three factors also affect operating performance significantly. Thirdly, the paperbuilds model empirically analyse the factors that influence the small banks’ operatingperformance from six aspects, including market conditions, regulatory policies, thestructure of bank equity, business scale, loan concentration, and human resources. Theresult shows that there are many differences on factor impact among various banksFinally, the paper propose some recommendations to improve the small andmedium banks’ operating performance. To effectively improve operating performance,small and medium banks should be subordinated to and serve the country’smacroeconomic development strategy,base on their own advantages, insist oncompetitive differentiation, standardize operations, improve the corporate governancestructure, adherence to appropriate scale on the base of risk management and control.