Research On The Profit Model Transfor-Mation Of Chinese Commercial Banks Under The Background Of Interest Rate Liberaliza-tion

For a long time, China’s commercial banks have been upholding the way of thequantitative business development that take the expansion of assets as the core, businessstructure is mainly on the traditional deposit and loan, customer structure is generallyconcentrated in large state-owned enterprises, the industry leader and listed companies,income structure is focused on spread income, the key reason of this businessdevelopment have been followed and strengthened is the interest rate controls. Based onspread of around3%, commercial banks can get high and stable source of profit alonerely on lending business, in this case, commercial banks lack the motivation and abilityto engage in other intermediary business.With the gradual progress of China’smarket-oriented reform of interest rates, commercial banks’ gap between savings andloan tends to narrow, a variety of direct financing instruments of capital market andmoney market have been constantly introduced, competition become increasingly fiercein the industry. Traditional profit model in the past depended on rate is facing seriouschallenges. Therefore, in order to adapt to the new environment, new marketscompetitiveness, seek new development, commercial bank profit model urgentrestructuring, reducing dependence on spread income, and ongoing operations ofnon-spread low-risk, low-cost, high-yield, which will become an important channel forthe commercial banks to improve their level of profitability.In this paper, firstly introduce the liberalization of interest rate and profit model ofcommercial banks for a general overview. Then lists the impact of interest rateliberalization pointed to commercial banks, followed by the United States, Japan, HongKong commercial banks’ profitability in the transition under the interest rate marketbackground, making lessons and guiding the transformation of China’s commercialbanks profit model. When studying on China’s commercial banks profit model, making16listed commercial banks as a representative, through the analysis income of differentbusiness and profit structure, pointed out the present situations and characteristics ofChina’s commercial banks profit model, showed the urgency of profit modeltransformation. In the part of empirical analysis, the paper took the third quarter of2007to the second quarter2014financial data of14listed commercial banks as a sample,analyzing the impact of interest income and fee income on commercial bankprofitability, then further divide the bank for large and medium-sized commercial banks. The paper researched the different effect on different types of commercial banks byintermediate business income, and drew the conclusion that the effect of intermediatebusiness income of increasing banks’ profitability is highly efficient. Finally, the paperpropose some suggestions on China’s commercial banks profit model transformation.Finally, the paper put up with the suggestions of profit model transformation fordifferent types of banks. The large commercial banks should take advantage of theirlarger asset size to subdivide customers, improve service quality, increase the proportionof intermediary business income, small and medium sized banks should use theiradvantages of operating flexibility, fine service and other advantages to strengthenbusiness innovation and risk management capabilities, to seize the opportunity interestrate reform and form heterogeneous competition with large commercial banks, then allthe different types of commercial banks can achieve sustainable development.