Financial Disintermediation Impact On China's Commercial Banking Business Model

Financial disintermediation means with the process of economic and the financial markets development, both of the supply and demand of funds bypassing financial intermediaries to cooperate directly. Since the1960’s, with the U.S. interest rate controls financial disintermediation has appeared, it has caused a great impact on the traditional business model of commercial banks. In order to reply the challenges, commercial banks have do their best to create many innovative products and explore new business areas, also the reorganization of their structure. Through nearly half a century hard work, commercial banks of the United States and other Western countries succeed to deal with the threat of financial disintermediation, while the capital markets, money markets also gained full development, established a sound financial system, to make banks and financial markets function competitively and complementarily, and ultimately promote the healthy and rapid development of the western world economy.After reform and opening up for about30years, with the steady advance of economic and financial reform, and the rapid development of the capital market. Operating environment of Chinese commercial banks is experiencing unprecedented changes, banks’ traditional function of intermediation is weakened, while the trend of financial disintermediation increasing apparently, especially after the global financial crisis. So Chinese commercial banks should learn the experience from Western countries, changing the traditional business model, seize this opportunity to achieve continuous development of the banking and financial system.This paper summarizes the previous results and as the following three steps to discuss:first, theoretically producing a comprehensive mechanism of financial disintermediation, lay the theoretical foundations of the text; Secondly, analysis the Chinese financial disintermediation and its motivation; Using appropriate quantitative models to measure the financial disintermediation trend and its impact on commercial banks; Finally, learning from the experience of developed countries which successfully deal with the financial disintermediation, and combining with China’s actual view from the perspective of the financial function to provide advice and recommendations reasonable to change the business model of commercial banks.