The Transformation Path And Direction Of Chinese Commercial Banks’ Profit Model

Although Chinese commercial banks rank well, the reality of "big but not strong" still exists, there is a big gap between advanced commercial banks in Western countries what have profit model. Chinese specialties in a planned economy to a socialist market economic transition, market development is imperfect, the modern enterprise system is not standardized,the Government still supervises commercial banks strictly,its intervene in a timely manner results in softening of budget constraint of banks. Their main source of profits is the interest margins. Intermediary business development of banks lags behind,the profit model is single as well.The China’s financial reform is being deepened constantly, and the deposit insurance system has been implemented,the pace of interest rate market becomes closer and closer; China has allowed private capital to qualified property rules and norms established by law initiated by small and medium banks to improve the multi-level capital market system set up.All of these imply the end of high interest rate era China’s commercial banks. Meanwhile,the balance of the treasure,as the representative of current through the sudden emergence of Internet banking,will accelerate the process of financial disintermediation,prompting commercial banks to re-examine their competitiveness and financial innovation. In addition,in December 2010 the Basel Committee on Financial Supervision Bank for International Settlements released Basel III(hereinafter referred to as Basel III), so China’s commercial banks will face more stringent regulatory capital constraints, urgent adjusted earnings model to deal with the new regulatory requirements. Changes in the banking environment tells us that China’s commercial banks profit model must be transformed.This paper is based on the review of previous studies, the status quo of China’s commercial banks’ profitability will be analyzed and combined with changes in the banking environment, specifically addressed the profit model transformation direction and path.