A Study Of The Influence Of Commercial Banks Income Structure In China On The Profitability

Since1970s, Along with the development of financial liberalization and application of new financial technology, banking industry in western countries gradually shift their focus from net interest income based credit business to a variety of non-interest business. Non-interest income accounted for more than40%of revenue, which set off a wave of business transformation.Credit business occupies the dominant position in China. In recent years, Commercial Banks’ profit margins from credit business have been compressed under the influence of the interest rate market and financial disintermediation. The traditional profit model of commercial banks also suffered a serious blow. People have realized the importance to adjust the income structure of commercial banks, and many innovative bank products and services are provided to create more non-interest income. Although the proportion of non-interest income is21.5%in2012, compared with the developed countries, there is still a big gap.At present, what the characteristic is on the income structure of China’s commercial banks, the effect that the changes of the income structure and the differences among different kinds of banks on the earning. These problems have caused the extensive concern of scholars and relevant departments in recent years. But many of the current studies mostly focus on the qualitative analysis; a quantitative analysis of persuasion is very small. This paper attempts to combine normative analysis with empirical analysis, and set up a panel data model which based on a large number of actual data on commercial banks. Thus, it provides theoretical basis for the correct understanding and rational development of non-interest business in our country.This paper includes four parts. The first part summarizes the related research achievements about the income structure of commercial banks. The second part starts from the concept of income structure, and introduces the type of traditional business activities and the meaning on income structure of commercial banks. According to the analysis of the actual situation in our country, it is found that non-interest income failed to get the effect instead of interest income. At the same time, the effect on the stability of the banks’ earnings will be restricted by the cost of business. The third part starts from the current market background, analysis the status quo about China’s commercial banks and draw on the relate data of the developed areas on Non-interest income, come to the problem of commercial banks income structure. In the empirical research part, this paper selects the financial data of16listed banks during the period of2005to2012as a sample. It firstly analyzes the income structure how to affect on banking operating profit, and put the variables of total assets, operating expenses, GDP growth into the regression model. In order to further researches, the listed banks are divided into three groups, to compare with the effect of differences. Finally, it draws some conclusions and policy recommendations.The conclusions are as follows. Now, China’s commercial banks deucedly rely on interest income, the non-interest business lack of new business innovation. In the empirical research part, the non-interest income improves commercial bank’s earnings efficiently, and the degree of the influence is higher than the interest income. The fees and commissions net income of Joint-stock banks and urban commercial banks impact on banking profitability is higher than the state-owned banks’. At the same time, the profitability of the banks is impacted by asset size, operating costs, economic development.