Study On The Impact Of Non-Interest Income On The Performance Of Chinese Commercial Banks

In recent years, with the speeding up of the process of financial liberalization, the development of marketization of the interest rate, and the appearance of financial disintermediation, commercial banks have to try their best to transform the operating strategy to handle the unavoidable downtrend of credit business. Banking industry of western countries has been increasing its emphasis on non-interest income step by step, through actively carry out investment banks, funds on a commission basis, insurance agents to enhance their profits. Compared with them, the proportion of non-interest income is so low in Chinese banks, that getting rid of the single profit gaining mode and constructing diversified income source are the important contents of the operational strategic transition. However, it is still a question if the non-interest income could improve the banks’performance, and we don’t have a clear academic conclusion about it.In this article, I discuss the similarities and differences of non-interest income concept between China and other countries, analysis the distinction, factors and the development of non-interest income of Chinese banking, explain the impact of non-interest income on the performance of commercial banks. In specific research methods, I selected 16 listed commercial banks, using the data of these banks’ financial reports from 2005 to 2013, which were appeared on the website. By means of the establishment of panel data model and under the American CAMEL rating system, I select non-interest income rate, return on assets, capital adequacy ratio and non-performing loan ratio as the index, and made empirical analysis on the relationship between non-interest income and performance of these banks. At last I get the next conclusions:The first, there is no obvious relationship between non-interest income and capital adequacy and liquidity of the selective banks;The second, the increasing non-interest income can help to raise the level of profitability, the ability of management and the quality of asset;The last, the improvement of non-interest income will make a better contribute in state-controlled banks on the management ability and the asset quality. But it will make a better contribute in joint-stock commercial banks on the profitability level.In the end, some suggestions are given to Chinese banks on how to develop non-interest income and raise the level of performance.