Research On The Impact Of China Monetary Policy Upon Commercial Banks’ Profit

we analyze the issue of commercial bank profitability from a macroeconomic perspective and micro-economic perspective, we established analysis framework of monetary policy to affect the commercial banks’ profitability through the analysis of the profit model of the commercial banks as well as the path of monetary policy changes affect the profits of commercial banks; we also test the impact on the direction and extent of the monetary policy variables on the profitability of commercial banks by an econometric model based on the examining of the monetary policy transmission mechanism through the commercial banks. Based profit model of China’s commercial banks, through the analysis of the profitability of commercial banks in the process of monetary policy transmission, we can see that the adjustment of monetary policy mainly through the changing of banks’ loanable capital scale and interest spreads to affect the commercial bank’s interest revenue. So far, in the condition of interest revenue of commercial banks as the main source of revenue, monetary policy adjustments will have an great influence on the level of profitability of the commercial bank.From the empirical result of our analysis, money supply M1, market interest rates have a positive correlation with commercial bank profitability, and the statutory deposit reserve rate have a negative correlation with bank profitability. When the central bank to increase the money supply and to enhance the market interest rates, commercial banks interest revenue will increase and finally improve the level of profitability of the bank; When the central bank to raise the statutory deposit reserve ratio, the bank’s loanable capital scale will be reduced, which will reduce the level of profitability of the bank. Money supply have the strongest impact on the profitability of commercial banks among the central bank’s monetary policy.