A Research On Influence Of Diversification To Commercial Bank Income, Net Interest Margins

In recent years,our country has carried forward market-based reform of interest rates.Commercial bank deposit and loan business increasingly fierce competition, While China’s commercial banks simply relying on the traditional business as the profit point of growth obviously can not meet the financial industry development. More and more commercial banks began to pay attention to the non traditional business income,And gradually diversified business operation is formed by combination of the traditional business and non-traditional business.However, the change of this management mode brought a lot of uncertainty to Chinese commercial banks.First of all,what does business diversification of commercial bank income effect?There are not the same conclusion in theory research. According to the theory of asset portfolio, not only diversification decrease the risk of commercial bank, but also bring diversification benefits to the bank. Some researchers believe that the traditional business development may bring negative effect to the income of commercial banks.Some researchers believe that the effect of the non interest on income of bank is uncertain.Secondly,what does the diversification of Bank effect on net interest margins? Carbo, Rodriguez puts forward the traditional business and and traditional business of commercial bank may exist between cross-sell phenomenon. This paper analyses the relationship between diversification and bank earnings, As well as inspect the influence trend of China’s business diversification to commercial bank.It can promote better coordinate development between traditional business and non-traditional business,and provide academic for the regulatory and commercial bank management. On the influence of net interest margin is reflected in a commercial bank loan pricing. In fact,we research the effect of diversification on loan pricing behavior of commercial bank business and provide academic basis to Commercial bank loan pricing decision-making. The article using2003-2010year112Chinese commercial banks unbalanced panel data,from two aspects of business diversification, under the assumption of fixed effect model, empirically researching the effect of diversification on commercial banks’income, loan pricing decision. And adding the square of non interest income ratio survey effect tendency of business diversification on commercial bank income.The first chapter, introduction, we Introduce the background and theoretical significance. Through arranging existing articles about the relationship of diversification,commercial banks’income, net interest margins, we summarize the insufficiency of current literature to find out point of reaserching.We Outlined research goal of this paper,summarized the potential innovation and characteristic of research content and research and Listed in structure arrangement of this article.The second chapter,Empirically studying the effect of diversification on commercial bank income.Through screening of Bankscope financial statement data, according to the effects of commercial bank income variables, from two levels of business diversification,we established foundation model and growth model.We summary the empirical results and conclusion.based on regression analysis model.The third chapter, Empirically studying the effect of diversification on commercial bank’ net interest margins. Through screening of Bankscope financial statement data, according to the effects of commercial bank income variables, from two levels of business diversification,we established foundation model and two growth model. We summary the empirical results and conclusion.based on regression analysis model.The fourth chapter, conclusion and prospect.According to empirical results and conclusion of the second chapter and third chapter we summary the whole article.We List the innovation and characteristics, as well as the shortcomings.The main conclusion of the paperthe as following:development of traditional business contributes to increasing bank earnings. Diversification degree of traditional and non-traditional commercial banking business is higher, the bank’s earnings is better.Or to say, the commercial banks can get benefits from diversification. Trend of diversification effecting commercial bank income is "increasing the scale effects" stage in our country.Chinese traditional commercial banking business (net interest margin) and non-traditional business (net non-interest income) may exist cross-sale phenomenon. Through using non-traditional business commercial banks attract new customers to earn the customer’s non-interest income.Or through giving customers low loan interest rates,banks make up for the lower the lending rate from earning more non-interest income to.The influence of trading and financial derivatives business and fees and commission business on net interest margin is not obvious.But comparatively speaking, effect of fee and commission business on net interest margin are more pronounced.In this paper, the innovation point and characteristics as following. First, the innovation of reaserching relations of diversification and commercial banks’ earnings.According to the76Chinese commercial bank data as samples, not only we reaserch large and medium commercial banks, but also small city commercial banks and foreign banks to reflect the development trend of Chinese banking industry’s overall more comprehensively.From empirical study on inspecting relationships between diversification and Chinese commercial bank earnings, net interest margins.From the actual conditions of China,they can provide theoretical support for the operation management of commercial banks.Second, data and variable characteristics.Net non-interest income form will is divided into3kinds in this article,namelytrading and financial derivative transaction income, net fee and fee income, net income (including insurance and insurance related to income, fees and commissions and other non interest income).In this paper, we use the Hofendal-Hirshman index to measure the diversification development degree of bank business, which can reflected diversification development of business sidely and Introduce the square of non interest income ratios to test the influence trend of diversified business of commercial banks on profit.