Research On Financial Disintermediation And The Empirical Analysis Of Its Impact On Profitability Of Commercial Banks

The new term "Financial Disintermediation" first appeared in the United States. In the1960s, aiming to reverse deficit of international trade and get rid of high unemployment, the United States issued" The Q Regulation". It imposes restrictions on bank deposit rate. The implementation of "The Q Regulation" forced money to escape from the bank. So the financial disintermediation appears. As capital market and the economy continue to develop, China appears financial disintermediation too. The capital circulated outside the bank system. Through the analysis on the financial disintermediation in our country, we find that the development of financial disintermediation in our country is still a long-term trend. Financial disintermediation not only has a serious impact on banking lending and deposit, resulting liquidity shortage of the banking sector. It also provides the corresponding conditions for the transformation of China’s commercial banks. On the one hand, the banking industry should follow the development trend of financial markets and speed up the transformation and adjustment of traditional business. On the other hand, the banking industry should improve innovation capacity to respond to the negative impact brought by financial disintermediation.In this paper, on the basis of existing research, combined with the actual situation of our country, I form the following research idea.1) In this paper I choose the right formula. I use the asset intermediary rate and debt intermediary rate which is internationally accepted. Then I select nine years data from year2003to2011to calculate the disintermediation phenomenon. I analyze the major manifestation of financial disintermediation through the results calculation. I also consider the reversal analysis of financial disintermediation.2) This paper defines the concept of financial disintermediation. Taking the internet financial into consideration, this paper classifies the financial disintermediation into asset disintermediation, the liability disintermediation and the technology disintermediation. Based on the classification, I analyze the present situation and the reason about disintermediation.3) This paper discusses the impact of financial disintermediation on the deposits and lending of commercial banks and profitability. The core content of this article is empirical analysis about financial disintermediation influence to bank profitability.4) Through the above analysis, combined with the specific situation of China’s banking industry comes to conclusion and policy recommendations of the article. Financial disintermediation could have impact on lending and deposit, this paper puts forward that the bank should change the management idea. It should not only focus on lending and deposit, but also should provide more specific value-added services. The empirical result shows that the financial disintermediation could impact on the profitability of the banks. So this paper proposed that the bank should innovative the business of assets, liabilities and intermediary in order to remain the growth of profit. This article proposed that banks should develop electronic banking business to cope with the negative impact of technical disintermediation. Through this study we hope to find a new profitability innovation in order to minimize financial disintermediation effect on banks.