The Research On The Influence Of Monetary Policy Upon Commercial Banks’ Profit

As our financial market participants and important monetary policy executor,profitability of commercial bank especially catches numerous experts and scholars’attention. Experts discuss commercial bank profits from different aspects and givesuggestions of how to increase the profit. With monetary channel are inefficient inchina, commercial banks is inevitably affected by its changes as the intermediary ofcredit channel of monetary policy. This article measures the degree of impact ofmonetary policy on commercial bank. Therefore, it’s significant for banks toaccurately measure the monetary policy risk and improve the profit.After the review of the monetary policy transmission mechanism, article completecorrelation analysis between monetary policy tools and the profit of commercialbanks. Deposit interest rate and deposit reserve rate have high correlation with theearning of commercial banks. Combining theoretical analysis with empirical analysis,this paper chooses the monetary policy’s impacts on banks for the study. We use netreturns on net assets measuring profit condition of commercial bank. Interest rate anddeposit reserve ratio are used to measure the strength of the monetary policy. Takinguse of panel data of13listed commercial banks, we calculate the degree of monetarypolicy’s influence on commercial banks. The conclusions are as follows: Theimprovement of deposit interest rates will lead to the improvement of return on netassets of commercial banks; Deposit reserve rate and return on net assets arepositively related, this conclusion maybe due to the expansion of deposit-loan spread;Mild inflation has a positive impact on profits of commercial banks.Combined with earlier theoretical analysis and empirical results, we give somesuggestions of how to improve the commercial banks’ profit after the study. Throughstrength of the interest rate trend analysis, the establishment of interest rate riskprevention mechanism and keeping watch policy risk, commercial bank caneffectively control the risks from monetary policy changes and improve the profit ofcommercial banks.