Empirical Analysis Of Our Country’s Commercial Bank Profitability And Interest Spreads

Since the beginning of the21st century, China’s banking industry, as the pillar industry of China’s stable economic development, is developing rapidly, the development of the banking sector plays an important role in China’s long-term economic stability and healthy development. But compared to foreign banks, Chinese commercial banks are relatively weak in management level and profitability. As key indicators of the business receipts of the traditional balance of commercial banks, the S&L spreads has become the focal point of both bank industry and academic researchers, how to respond to the change of S&L spreads and how commercial banks improve their profitability steadily has also become the urgent issues of bank industry and academia. Based on the above, in this essay I will make a tentative analysis and study of the relationship between the profitability of China’s commercial banks and S&L spreads.In this paper, the first chapter reviews the domestic and foreign scholar’s study about the profitability of commercial banks and S&L spreads. In the second chapter I first make definition of the profitability S&L spreads, then select the ROA as a measure indicator of commercial banks’profitability. And use the difference between the average lending rate and the average deposit rate to calculate the SLS of China’s commercial banks. Then make an overall analysis of the profitability of the influencing factors of the profitability of China’s commercial banks. At last of this chapter, analyzes the relationship between the commercial bank profitability and loan-to-deposit spreads. In the third chapter, I first select the proper measure indicators of the influencing factors of commercial bank’s profitability according to the analysis in chapter2and define the connotation of each index. then pick up the nine major commercial banks’ quarter data from2007to2012to make a general statistical analysis about the relationship between their profitability and S&L spreads by calculating the mean value of each indicators. In chapter4, on the basis of the analysis above, using the quarter panel data from2007to2012of the9major banks, taking advantages of econometric methods to build an empirical model. Finally draw the following conclusions:there is a positive correlation between SLS、GDP、SL、BP and ROA; and a negative correlation between TA、NPL、 CAR、MR and ROA. Among those, the correlations between SLS、TA and GDP、ROA is most significant. In the last part of chapter4, I carried out a detailed analysis of the empirical results according to the theories above and the bank industry’s status of China.At last,I make some suggestions for the government and banks to make methods on how to improve commercial banks’ profitability according to commercial banks’ status in China.