Research On The Effects Of Non-interest Income On The Technical Efficiency Of Chinese Commercial Banks

In recent years, foreign banks enter to the domestic market, financialdisintermediation becomes a trend and the interest margin continues constrictive andso on, make the commercial banks in china begin to realize the importance ofadjusting income structure and changing the model of profit. Commercial banks startto adopt various strategies to broaden sources of income and focus on thedevelopment of non-interest income business, the proportion of non-interest incomeaccounting for operating income also increases year by year. However, what effectsdo such a booming non-interest income business exactly bring to the technicalefficiency of banks, this paper will study the problem.At first，this paper briefly expounds the research achievements at home andabroad and relevant theory, then describes in detail the background of Chinesecommercial banks expanding non-interest income and current developing situationand problems of non-interest income. In the empirical part, we choose14Chinesecommercial banks from2001to2010as the research sample of empirical analysis,use DEA method to calculate technical efficiency according to sample data andanalyze it, and then make the panel data regression analysis according to relationshipbetween the non-interest income and its structure and the technical efficiency ofbanks. The empirical results show that technical efficiency of Chinese commercialbanks have been greatly improved than before, wherein, the inefficiency ofstate-owned commercial banks are mainly due to pure technical inefficiency, and theinefficiency of joint-stock commercial banks are mainly due to scale invalid;non-interest income ratio generally have a negative effect on the technical efficiencyof banks, the effect of state-owned commercial banks’ non-interest income ratio onthe technical efficiency is not significant; there is a negative correlation between feeand commission income and investment income ratio and technical efficiency, andthe correlation coefficient’s absolute value of the fee and commission income ratio isbigger, this indicates the negative effect of non-interest income on the technicalefficiency is due to the negative effect of net commission and fee income on thetechnical efficiency, the negative effect of the investment income on the technicalefficiency is a reason of the negative effect of non-interest income on the technicalefficiency. Then the paper makes a reasonable explanation on its reason. In the end,the article summarizes the research results and puts forward the corresponding policyand suggestions. The innovations of article lie in: first, it makes a unified and reasonabledefinition of efficiency index based on the previous researches, which provide acertain reference for future research. Second, in the part of empirical study, thispaper uses the complete panel data in recent years to make a regression analysis,considering the impact of dimension on model fully, it uses uniformly relative ratioapplication, chooses the appropriate model and method for estimation, finally obtainsa good estimate. Third, through empirical analysis relationship of non interestincome and its composition ratio and the technical efficiency of banks to explore theimpact of non-interest income on the technical efficiency and its reasons, and putsforward the related policy suggestion.