Research On Profitability Of China’s Listed Commercial Banks In The Interest Rate Liberalization Reform

The interest rate liberalization is that the monetary authority delegated the interest rate pricing to financial institutions; financial institutions determine the market interest rate based on market supply and demand of funds. China began the interest rate market reform in 1996, learning from the interest rate market of western countries, China’s interest rate market adopted a planned step by step way of gradual reform. In 2007 the People’s Bank of China to raise interest rates six times in a row, cut interest rates five times in 2008, twice in 2010 to raise interest rates, raise interest rates three times in 2011, twice in 2012 to cut interest rates and adjust the floating range of deposit and lending rates, the lending rates of financial institutions regulated fully liberalized in 2013, you can see the interest rate volatility is very frequent in the process of interest rate market, which had a certain impact on China’s financial system. As the main part of our financial system, the commercial banks take most of the economic and social financing; fluctuations in interest rates affect the profitability of commercial banks, thus affecting the economic operation of the entire society. So profitability study on commercial banks in the process of interest rate market is conducive to increasing the vitality of the bank and the stability of the national economy.Since the development of Chinese banking, the system of commercial banks including state-owned commercial banks, joint-stock commercial banks, city commercial banks, postal saving banks, credit cooperatives and other banks. The market structures of commercial banks are different; the development between each bank is not extremely balanced. China joined the world trade organization in 2001, the financial business of foreign banks is full liberalization in our country, the competitiveness of Chinese commercial banks to be challenged, and profitability comprehensive reflect the competitiveness of the bank. Commercial banks listed on the one hand to enrich its core capital, on the other hand, is beneficial to standardize their operations, thereby enhancing the ability of banks to prevent risks and increase the competitiveness of its peers. With the development of international finance, the profitability of listed commercial banks in the entire banking system is more and more big, increasing the proportion of its earnings reflect the profitability of the entire banking system,In view of the present domestic studies on the profitability of Chinese commercial banks, most scholars focus on the profitability analysis of influencing factors, or focus on a certain type of commercial banks profitability under the interest rate market, they all exist some prejudices. According to the specific situation of China’s listed commercial banks, this paper give a comprehensive study on the profitability of the market-based interest rate in the three types of listed commercial banks, it provides new ideas and methods for the study of Chinese commercial banks’profitability issues, and enriches the domestic research for bank profitability. At the same time, it put forward some proposals to maintain and improve the profitability by analyzing the changes in the process of interest rates market of commercial banks profitability, which have some guidance.This paper is the analysis of the profitability of 16 listed commercial banks in the process of market interest rates environment, first it’s a simple sort of domestic and foreign research on bank profitability; then it summarizes the definition and theoretical basis of the interest rate market, the process of Chinese market-oriented interest rates reform and the related theories of commercial banks’ profitability, the sources of bank profitability and the measure of profitability indexes; followed by the qualitative analysis for the impact of interest rates market reforms on listed commercial banks’ profitability; Finally, it put forward some suggests to different listed commercial banks for improving profitability in the process of market interest rates.The empirical analysis of the interest rate market reform on listed commercial banks’profitability is an important part of this article, the author collected the quarterly financial data of 16 listed commercial banks from the first quarter of 2010 to the third quarter of 2014, select the ROA on behalf of the bank’s comprehensive profitability, and selected non-interest income, loan-deposit ratio, earnings per share, capital adequacy ratio, non-performing loan ratio, net profit growth and net interest margin seven indicators as explanatory variables, divided the listed commercial banks into three categories, like state-owned commercial banks, city commercial banks and joint-stock commercial banks, established a multiple regression model to three different types of listed commercial banks’profitability for quantitative and comparative analysis by using SPSS software, the conclusion drawn five points:First, on the whole, the deposit-loan ratio, net interest margin, net profit growth affect the listed commercial banks’ profitability were not significant, non-interest income have effect on the listed commercial banks’profitability, but little effect; Second, the impact of earnings per share on the listed commercial banks’ profitability have in common; Third, the impact on the joint-stock commercial banks’ profitability tend to the overall listed commercial banks; Fourth, the impact of net interest margin on the state-owned commercial banks’ profitability was significant, the impact of net profit growth on city commercial banks’ profitability was significant, the impact of capital adequacy ratio on the joint-stock commercial banks’ profitability was significant; Fifth, the deposit-loan ratio had a negative impact on the state-owned commercial banks’ profitability, but the impact on joint-stock commercial bank profitability is positively affected. For the five empirical conclusions, the paper give follow recommendations for each type of listed commercial banks to improve profitability in a market-based interest rate. First, the state-owned commercial banks should be placed on increasing earnings per share and non-interest income, reducing net interest margin and loan-deposit ratio to improve its profitability in the process of interest rate market, such as increasing financial innovation, strengthen risk management of savings and loan business, improve the organizational structure of the bank and strengthen cost management; Second, the city commercial banks should promote the interest rate policies and sound deposit insurance to improve their profitability in the process of interest rate market; Third, the joint-stock commercial banks increase their profits in process of interest rate market should develop intermediary business actively to increase the proportion of non-interest income and create differentiated deposit and lending rates to improve loan ratio.