The Effect Research Of Non-interest Income On Revenue Of Commercial Banks In China

Influenced by interest rate liberalization, financial disintermediation and financial regulation, the traditional loan business profitability of our country commercial bank declined. To seek for a new benefit growth point, commercial banks pay more attention to development of non-interest income. Particularly in October 23, 2015, the People’s Bank of China decided not to set the upper floating limit of deposit rates of commercial banks and rural cooperative financial institutions, which indicates that China’s interest rate marketization reform has been basically completed and that it would be exigent for commercial banks to develop non-interest business.Based on the previous literature review, this thesis adopts the qualitative analysis,quantitative analysis, and comparative analysis method in order to study the effect of non-interest income on revenue of commercial Banks. First, this paper qualitatively analyzes the concept and characteristics of non-interest income, influence factors, and the relationship with the net interest income. It also summarizes the necessity and theoretical foundation of China’s commercial banks developing non-interest income.Second, this paper uses the comparative analysis to study present situation and trend of different types of banks’ non-interest income development, and summarizes problems and reasons of non-interest income development. Finally, the sample comes from the quarterly data of 14 listed banks from 2008 to 2015. Listed Banks are divided into large state-owned commercial banks, joint-stock commercialbanks, city commercial banks.Based on the three types of banks, the panel data regression model will be set respectively. In the models, return on assets act as the bank profitability indicators and non-interest income accounted for as the Banks’ non-interest income indicators. Interest rate policy variables are added into the models in order to prove the impact which interest rate marketization and non-interest income have on the performance of commercial banks.It finally comes to the conclusion that interest rate marketization reform has a negative effect on the three kinds of commercial bank performance, especially large state-owned commercial banks, which mainly because large state-owned commercial banks rely on the spread between deposits and loans as a main revenue source and are influenced greatly by interest rate marketization. Non-interest income has a positive influence on the performance of three kinds of commercial banks, but city commercialbanks is influenced least, which is because restricted by the scale and the region, the non-interest income of city commercial banks grows slowly. On the basis of the analysis,this paper puts forwards the countermeasures for the development of non-interest income of commercial bank, including actively expanding non-interest business,improving non-interest income proportion; increasing business innovation ability,developing non-interest business differentially; based on the high-tech, introducing business professionals, and improving the efficiency of non-interest income.This essay is innovative in that it divided listed commercial banks into 3 kinds, and it uses the quarterly data of eight years from 2008 to 2015 as sample data. Besides, this paper put the variable---the interest rate policy into the empirical research as one explanatory variable, which provides both a theoretical and an empirical basis for commercial banks to expand non-interest income during the market-based process of interest rates. However, due to the fact that the access to the data of city commercial banks is limited and there has been little information disclosed, this paper only chooses three city commercial banks as samples, which may not reflect the conditions of all the urban commercial banks in China.