A Study On The Impact Of Non - Interest Income On The Risk Of China 's Listed Commercial Banks

In the background of the accelerated progress of interest rate liberalization, the highlighted financial disintermediation and the increasingly fierce competition between commercial banks facilitated by internet financing and private banks, interest spreads of deposit and loan is estimated to be less, which will decrease interest revenue. At the same time, non-interest income is booming, which has already become a new income driving force of commercial banks. However, commercial banks shall raise their awareness of risk of non-interest income. What’s more, there are rare studies on the effects of non-interest income on commercial banks of our countries. The global financial crisis of2008revealed that ineffective supervision could lead to huge losses. This thesis tries to study the effects of non-interest income on commercial banks of our country.First of all, this thesis starts with the definition of non-interest income and then combed the studies on the effects of non-interest income on commercial banks home and abroad. Those studies revealed that non-interest income firstly decreased and then increased the risk of foreign commercial banks and there are still rare studies of the effects of non-interest income on commercial banks of our country.Secondly, this thesis analyzed the risk characters of non-interest income and combed the portfolio theory which can disperse risk of commercial banks, which made it is theoretically difficult to tell whether non-interest income can decrease the risk of our commercial banks or not.Thirdly, with the help of system GMM, this thesis utilized the financial data between the third quarter of2007and the third quarter of2013to study the effects of non-interest income on commercial banks of our country and come to such conclusions:(1) Non-interest income can reduce profit risk of commercial banks. The fee and commission income can reduce the profit risk, rise risk-benefit and disperse credit risk of commercial banks. Investment income, however, owing to its fluctuation increased the profit risk of state-owned commercial banks;(2) Compared to joint-stock commercial banks, it is the better income structure and high fluctuation of invest income of state-owned commercial banks that decrease risk, rise risk-benefit and disperse credit risk of state-owned commercial banks.Finally, combining with the current situation, income structure and risk character of non-interest income and its effects on risk of commercial banks, this thesis put forward commercial banks some specific suggestions on increasing non-interest income and decrease risk of commercial banks.