The Empirical Study Of China’s Commercial Banks’ Non-interest Income On Bank Performance

As the substantive progress was made in making interest rates more market-based and the rapid development of financial disintermediation in china, this paper use the Chinese 15 national commercial banks’ 2002-2012 panel data to examine commercial banks’ non-interest income’ impact on bank performance. After Hausman examination we chose a fixed effects model regression, and to circumvent dates’ endogeneity, robust estimation was used and we found: the commercial banks and the share of non-interest income showed a positive relationship with banks operating performance, the regression coefficient at the 1% level is highly significant, commercial banks’ non-interest income increased by 1% per share, the bank will increase 0.024% performance, which means that commercial banks under the premise of effective risk control vigorously develop intermediary business and off-balance sheet business is conducive to rich bank sources of income and effectively improve the bank’s operating performance in an increasingly competitive market environment, therefore, Chinese commercial banks should be actively pursued product innovation in order to improve the competitiveness. Regression results also found that the size of bank assets to commercial bank performance also showed a positive effect. In order to investigate the difference between the four major state-owned commercial banks and other small and medium commercial banks, the difference two sets of data were used for regression, and the regression results show the regression coefficients of large banks and small banks are significantly different, and the coefficients’ significance levels are also very different, the share of non-interest income of small banks is much larger than the ones of large banks, small banks visible share of non-interest income pose more significantly impact on performance than the four major state-owned commercial banks; however, the impact on performance from the asset size perspective, the four state-owned commercial banks scale greater than small banks. Faced with increasingly fierce competitive environment, diversification strategy maybe the wise path selection in the future development of China’s commercial banks, and actively engage in financial innovation to improve the bank’s core competence is banks’ invincible fundamental.