A Study On The Impact Of Off - Balance Sheet Business Development On The Performance Of Listed Banks In China

Since the1980’s, with the speeding up of the financial liberalization and financial innovation, many of the commercial Banks in the European and American countries have common encountered bottleneck on the credit business which basis on the traditional interest income, that force them to develop the off-balance-sheet business. Through the development of off-balance-sheet business, they not only can reduce operating costs, but also can increase revenue and avoid risk, which making it a major source after the interest income.The global financial crisis, which from2007to2009, has a serious impact on economic growth of many countries. To stimulate the growth of the domestic economy, our country implemented a proactive fiscal policy and a moderately easy monetary policy, and moderate scale of open credit controls. But the credit boom has accumulated a potential risk to the banks, making them facing a great pressure and challenge. In addition, the "Basel III" and "The12th five-year plan of financial development and reform" are put forward the new requirements on bank capital regulation. Under the double pressure, they intensified the development of the off-balance-sheet business, which in order to improve the performance. But there is no evidence to verify that the income of OBSA is beneficial to improve the performance. This question deserves further research.In this paper, firstly, explains the motivation of the commercial banks to develop Off-balance-sheet business by constraining the Induction Theory, Avoid Regulation Theory, Transaction Cost Theory and Currency Theory, beside, analysis the mechanism of action that OBSA influences the performance through the Theory of "Economies of Scope". Secondly, chooses13listed Banks in2005-2012as the research sample in the empirical part, panel data model and regression analysis, respectively to investigate the OBSA how to influence the performance and the relationship between each component and bank performance. The regression results show that the off-balance-sheet business income was significantly positively related to performance, the financial service income also significantly positively related to the performance, but the financial derivatives and other several revenues didn’t tune significantly correlation with the performance. Finally, the conclusion is made the further explanation at the end of the paper, and puts forward the relevant countermeasures on how to promote the development of OBSA in our country.