The Impact Of Chinese Commercial Banks’ Income Structure Of Different Scales On Profitability

At present, the development of China’s capital market is still insufficient, commercial banks in the entire financial system still occupy a pivotal position, and its earnings growth in the national economy has a great contribution. With the deepening of the interest rate liberalization, commercial banks’ deposit and loan shrinks, intense competition makes limitations of credit income on bank profitability become increasingly prominent, more and more banks began to actively expand their business, devote their energies to non-interest income sources. These factors make the income structure adjustment of China’s commercial banks urgently, to investigate how to optimize the income structure of China’s commercial banks and to increase the level of profitability is a practical urgency.In this paper, began with the basic theory about the commercial banking income structure and profitability, combined previous studies scholar with dynamic object properties and characteristics of this study, elaborated the definition of the concept as well as related support classical theory. Subsequently this paper systematically explains the revenue structure of China’s commercial banks and profit levels, and based on the reality of the analysis, using 33 Chinese commercial banks’ 2007-2013 annual panel data, quantile regression was explored to get the conclusions of income and non-interest income structure on commercial banks’ profitability levels. The results showed that during 2007-2013, medium and small commercial banks’ profitability is still too dependent on credit sources of income, but its investment business is stronger than large commercial banks. In addition, the impact of the credit income for large and small commercial bank profitability is particularly significant, where the regression coefficients in the large commercial banks at 0.1 sites appeared, slightly negative impact, then quickly turned positive after a significant impact, and with the enhancement of return on assets, the rate of credit income on the score sites waning; medium-sized commercial banks remain relatively stable positive effects, the degree of influence waning; positive impact on small commercial bank’s return on assets of 0.5 maximum points at the site, promoting the role and scores at the site of the capital gains rate is also waning. Fee and commission income accounted for a negative impact overall, only significant positive under the sample of large commercial banks, the impact in the low-scoring sites at relatively stable; under the medium-sized commercial bank sample, its influence in the low-scoring sites on the capital gains rate is positive, then becomes negative impact under small commercial bank sample. Investment income accounted for a negative impact and the sample of small commercial banks is particularly significant. Specifically, the large commercial banks’ regression coefficients in low-scoring sites is positive, then quickly turned negative effects, and maintain around -0.5 at high levels; medium-sized commercial banks has negative regression coefficient, and the impact is stable, but the overall significance is not strong; the impact of small commercial banks in low-scoring sites on return on assets is more obvious, and then gradually reduced to the extent of negative impacts.The Innovation of this paper is by studying the impact of commercial banks’ income structure of different scales on profitability through detailed empirical description, found the impact of fee and commission income to medium-sized commercial bank, at the low score of 0.3 before the site is positive, and in the medium and high site becomes negative impact, the coefficient under the sample of small commercial banks is always negative, and becoming more and more significant with the rise of sub-sites. Those mean as for medium and small commercial banks, with the enhancement of the rate of return on assets, fee and commission income is becoming a major factor which constrained its earnings growth, and operating costs as a main cause can not be ignored.