The Effect Of Non-interest Income On Risk Of Commercial Banks In China

With the deepening reform of our market economic system, the development of banking is under observation by more and more people. Especially in recent years, China has gradually eased restriction of foreign banks’entering, the competition in savings and loans is intensifying, disintermediation phenomena appears and interest rate reform, which makes increasing the rate of non-interest income and developing the non-interest business become the new driving force of banks’ development. It is doubtful whether increasing the non-interest income can enhance the efficiency and change risk of banks.This paper starts with the non-interest income, introducing the definition of non-interest income and the development of non-interest business in China. Then in the empirical analysis part, this paper bases on some related theories and makes a regression model, afterward, selects the data of13banks during the period of2007to2011as the reach sample. The result indicates that:(1)the relationship between non-interest income and risk is positive correlation, which means the banks’risk will grow when the rate of non-interest income increases;(2)when comparing the state-owned commercial banks with the joint stock commercial banks, the influence of the rate of non-interest income on the risk of banks is smaller in the state-owned commercial banks than the joint stock commercial banks. Finally, with the analysis and the practical situation, we give some suggestions, hoping which will promote the development of non-interest business.