The Study On The Relation Between Income Diversification And Performance And Risk Of China’s Commercial Banks

For a long time,seperate operation and management have been implementing in financial sectors of China.The spieces of banking products are unsufficient, and its structure is simple.In China,the commercial banks depend on traditional credit business heavily,and development of non-interest business is lagging.Over the past years,China implemented extensive leapfrog economic development mode.In this envoronment,the economic banks is bound to provid loan support for a nunmber of large-scale development projects.This leads banks’operating income structure imbalanced.In recent years, domestic banks pay more attention to non-interest business. Development of the new activities also spurs the rapid expansion of the size of the traditional business. The reasons that domestic banks promote income diversified include:(1)Financial disintermediation.(2)Market-oriented rate.(3)Industry competition.(4)Upgrade of domestic financial needs.The problems encountered in the process of achieving revenue diversification contain separate operation management and disorder Intermediate business charges.In the section of empirical analysis, this study selects financial data of five State-owned banks and twelve Joint-stock banks during the period of1999to2011and nineteen city commercial banks during2004to2011as the research sample. The empirical results show that:(1)It could help banks promote performance to improve revernue diversification level,but the conclusion isn’t significance for Joint-stock banks sample.(2)The positive effect of revernue diversification is terminate.Whether it is state-owned banks, joint-stock banks or urban commercial banks, ones can’t unlimitedly push up performance by deversification.(3)Banks aren’t able to reduce risk by diversification.At last,the paper further makes a summary for empirical conclusion and puts forwad suitable suggstions and Research Prospects.The suggestions contain:(1)reinforce the banking fee and commission income and optimize its structure.(2)Strengthen risk control and supervision.(3)Strengthen the strategic cooperation with the non-bank financial institutions.(4)Achieve consolidated operating through the establishment of a bank holding company.(5)Actively develop electronic banking.(6)Attach great importance to the training and the introduction of personnel.It is the significance of this paper to find out the relationship between revenue diversification level and performance and risk, and the conclusion provides reference datas for China’s commercial banks to effectively carry out the revenue diversification.The innovations are as follows:(1)Lead risk factors into profitability indicators,and make performance more comprehensively be reflected.(2)Use the portfolio model to analyze the impact of the diversification to risk.(3)Introduce city commercial banks into data sample in the section of empirical analysis.