Research On The Influencing Factors Of Expected Yield Of RMB Financial Product Issued By Chinese Commercial Banks

In recent years, Bank RMB Financial Products have attracted more attention on both supply-side and demand-side. In fact, banks which played the role of supply-side, started to pay more attention on financial products for seeking more effective ways to release their pressures from many aspects such as pressure of supervision index, pressure of spreads based on marketization of interest rate, pressure cased by intense industry competition, etc. Meanwhile, due to the long-term slow development of Chinese financial market years ago, the emerging of Bank Financial Products have provided a new approach with moderate risk, liquidity and profit to investors on demand-side. As a result, investors have quickly accepted Bank Financial Products in the past several years. In order to assist banks better manage the existing problems and future development, and suggest more rational investment decisions towards investors through figuring out the cognitive errors and blind spots of Bank Financial products, this essay will investigate the development of Bank RMB Financial Products and the factors which could influence their expected yields in details.This essay will firstly illustrate the emergence, innovation and factors of expected yield through applying theoretical basis. Meanwhile, the development of Bank RMB Financial Products in China will be cited for further analyzing current Bank RMB Financial Products in five aspects including the level of development, the feature of structure and distribution, the feature of yield, the comparison of alternatives and the existing problems. As a result, the findings are presented as followed. Firstly, regulatory policy was a key factor that influenced the development of financial products. Secondly, the growth of financial products market is slowing, and the city commercial banks have become the main issue body. Moreover, financial products presented three new features including short-term, non-guarantee of capital and combination. Furthermore, most current expected yields were presented to be located in the range between 3% and 8%. Also, Internet banking, certificate of deposit, funds and financial products are alternative in a certain extent. Then the existence of homogeneous, understanding bias, poor service, lack of exposure and liquidity risks are determined to be the existing problems. After that, this essay reviewed the issue that how macro and micro factors influenced financial products, and three empirical models were applied to support the investigation. As a result, the Market Interest Rate Model presents that there was a stable long-term relationship between products of credit assets and benchmark of lending rate. Similarly, stable long-term relationship was presented among bonds, interest rate financial products and SHIBOR. That is, the expected yield of these two products could immediately and effectively reflect changes of rates. In addition, the model of macro factors shows that marketization of interest rate and benchmark of lending rate presented positive effects on expected yield of financial products, while money supply presented negative impacts. On the other hand, inflation rate and economic development level showed weak impacts on expected yield of financial products. Furthermore, the Product Design Model shows that the type of income, the type of issuing banks, the duration of commission, the starting amount of commission, the cost of products and risk were positively correlated with expected yield of financial products, while the issuing object showed the negative correlation and the plan raise amount and the increasing unit presented non-significant correlation. Finally, this essay will offer some practical suggestions to both banks and investors.