Contrastive Analysis Of American And Chinese Commercial Banks’ OBSA Operation

In last decade, with the changing situations in Chinese financial environment including the economic globalization, the financial disintermediation, intense banking competition, and strict monetary policies, the interest income was becoming insufficient in supporting the Chinese commercial banks’operation. Hence these commercial banks began to pay increasing attention on the operation of the off-balance sheet activities (OBS). However, comparing with commercial banks in developed countries, Chinese commercial banks have some shortcomings in the operation of OBS. To get better performance of OBS operation, Chinese commercial banks need to make difficult decisions about OBS operation strategies in Chinese current financial environment. To facilitate the decision making process, this paper launched qualitative and quantitative comparative analyses to OBS A operation strategies of American and Chinese commercial banks.Before these analyses, this paper explicated the conception, characteristics and contents of the OBS, and distinguished it with intermediary activities and non-interest income activities. Then the chapter discussed the necessity and rationality for the commercial banks to run OBS in eight respects including the market demand, interest rate liberalization, financial disintermediation, and intense banking competition. In the end, this chapter reviewed foreign and domestic literatures in this topic.To complete the qualitative comparative analyses, this paper briefed the history of the OBS operation of American and Chinese commercial banks and then analyzed the characteristics of their current conditions. This chapter found that the OBS operated by American commercial banks were sophisticated, high-risk, accurate priced, companied with management reform, and miscellaneous. As for Chinese commercial banks, their OBS operation heavily relied on on-balance sheet activities operation and was of inadequate innovations. Furthermore, Chinese commercial banks were barely merged into other financial markets and passive in respond to market needs. According to these findings, this chapter drew the conclusion that Chinese commercial banks needed to enhance their innovation capacity, fully emerge into financial markets, appreciate the value of market information, and perfect their management mechanism. To complete the quantitative comparative analyses, this paper studied the unbalanced panel data gained from Bankscope data base of83Chinese commercial banks during2004to2012and50American Commercial banks during2003to2013. This study found out the provision rate, liquid asset and gross loans had positive effects on OBS while capital ratio and NPL rate had negative ones, and Z-score was of a non-distinctive effect. With further analyses, this chapter drew the conclusion that Chinese commercial banks should allocate more resource for OBS development, professionalize the employees, improve the technology, and deeply mine client resource.Based on the conclusions drawn from Chapter3and Chapter4, this paper offered proposals that Chinese commercial banks should improve OBS operation in a strategic way, focus on markets’demand, and adjust their management mechanism.