Market Power, Non-interest Income, Commercial Bank Performance

As an important sector of capital allocation in China, and the strategic status anddominance in the process of economic development, Banks have a high monopoly interms of market structure.In recent years,China’s financial structure represented by thebanking has more market-oriented.Market Power of four major state-owned Banksgradually decreased, and the Market Power of joint-stock Banks, city commercial Banksgradually improved.All the changes of market power promoted the changes of industrystructure, competitive squeeze the profit of traditional Credit business.China’s bankingsector will gradually focused on the basis of the non-interest income from traditionalcredit business.non-interest income become commercial Banks an important source ofincome after the net interest income.As competition structure change and what if thediversity of income can improve the performance of commercial bank is a very worthstudying topic.Therefore, to explore the internal mechanism and the relationshipbetween market power,revenue diversification and performance of commercial bank hasgreat significance.Based on the theory of industrial organization S-C-P paradigm, we firstintroduced the institutional change of China’s commercial Banks, and thus caused thechanges of industry structure of commercial bank, emphasis on the change of thecommercial bank market power level and its development trends.Secondly analyzes thebackground and trends of the non-interest income of commercial Banks.Finallybuildding the market power, non-interest income, and the performance of commercialbank econometric model,using the data of15major commercial bank of China in2003-2011, taking the empirical measure of China commercial bank market power,non-interest income proportion and the performance of commercial Banks, andanalyzed the empirical results. and Suggestions are put forward.