Empirical Analysis Of The Profitability Of Listed Commercial Banks In China

As the most typical and important financial institutions, commercial banks face the fierce competition coming from both foreign banks and domestic market, in order to stand out in the competition, they must improve their competitiveness, and profitability is the most important part of it. Although China’s commercial banks has basically changed the previous situation of low asset quality, low capital adequacy ratio and poor market competition by way of asset stripping, capital injection and other ways in recent years, showing a strong momentum of development, however, they still face many problems, such as changing profit model, further improving asset quality and so on.Research on the profitability of commercial banks has always been the hot subject of academic field, and researchers have done a lot of investigation and research, including the profitability of commercial banks, influencing factors of profitability and the empirical analysis of profitability. Based on previous research, this paper divides China’s16listed commercial banks into state-owned commercial banks, national joint-stock commercial banks and local commercial banks, and their profitability is analysed by investigating the influencing factors both frbm the bank’s own factors and macroeconomic factors. Furthermore, in order to study the significance, the impacting direction and degree of these influencing factors, the paper does empirical analysis using panel data from1999to2011,and gives policy recommendations in the end.The framework of this paper is divided into five chapters:The first chapter is the introduction, mainly introduces the research background,banking industry overview, research implications and methods, which plays the role of foreshadowing.The second chapter is literature review, which defines the basic concept of the commercial banks and the profitability, then summarizes the importance of the profitability to commercial banks, research methods, and conclusions of the previous literature.The third chapter does normative analysis of factors that influence the profitability of commercial banks, which includes internal and external factors. The bank’s internal factors mainly include deposits, loans, asset quality, fee-based business, capital adequacy, liquidity, size, while the external factor is GDP.The fourth chapter is empirical analysis. This chapter firstly introduces the types and sources of data used, and then displays descriptive statistical analysis from the aspects of ROA, ROE, net income and total operating income. Subsequently econometric model is established, doing empirical analysis of the three types of bank profitability respectively. Finally, policy recommendations are given to different types of bank, for instance, state-owned banks should improve profitability by enhancing the quality of assets; joint-stock banks should actively develop their intermediary business, speed up the absorption of deposits and enhance the capital adequacy ratio; local banks should pay attention to the enhancement of the quality of assets, instead of developing intermediary business blindly.The fifth chapter is the conclusion part. On the basis of summarizing the study, this part clarifies the drawbacks of the paper and gives opinions about the direction of future research.