The Financial Disintermediation Influences On China’s Commercial Banks Profitability

With the development of Chinese financial reform and financial markets, the commercial banks of china not only faced with the impact from the capital markets, but also needed to effectively deal with the rise pressure of the Internet. Financial disintermediation become increasingly apparent and will continue deepen in our country. The emergence of financial disintermediation is both a challenge and an opportunity to the commercial banks. On one hand, the commercial banks’ traditional deposit and lending businesses were impacted by the trend of financial disintermediation. The bank’s interest income was reduced, and it has brought huge challenge to the development of the banks. On the other hand, the banks did a lot to cope with the impact of financial disintermediation, which was also a good opportunity for the development of the banks. Under the background of financial disintermediation, the scholars have done many researches. However, there were few empirical studies on the influence of financial disintermediation to the profitability of commercial banks. Therefore, the influence of financial disintermediation to the profitability of commercial banks was studied in this article, taking the data of 16 commercial banks in the period of 2005 to 2014 as an example.Firstly, this thesis reviewed the reported literatures and introduced some theory related to financial disintermediation. Secondly, the current situation of the Chinese financial disintermediation and the commercial banks’ profitability was interpreted. Thirdly, this thesis analysed how the financial disintermediation affected the commercial banks’ profitability in theory. Fourthly, the empirical research was carried out with 16 Chinese major commercial banks’ indexes from 2005 to 2014. In this part, some indexes were selected as variables to establish a model, which was used to evaluate the influence of financial disintermediation to the profitability of commercial banks. The result showed that the disintermediation correcting effect not only eliminated the negative impact of debt disintermediation on commercial banks’ profitability, but also improved the profitability of banks to some extent. Lastly, this thesis put forward some advices for Chinese commercial banks to deal with the financial disintermediation and improve their profitability.