Impact Of Diversified Operation On The Performance Of Small And Medium-sized Commercial Banks Of Our Country

As the relax of finance control, the big global banks start to carry out a cross-industry and cross-regional diversification strategy gradually. Banks suffer great impact of traditional credit business, because of the "Financial disinter mediation" and the advancement of marketization of interest rates. Diversification is an effective means for banks to steady income and cutting expenditure, so it is important for us to research impact of diversified business on the performance of small and medium-sized commercial banks.This paper first studies the theory of diversification and bank performance. Secondly,describe the influence factors of diversified management of small and medium-sized commercial Banks in China. Then, using the panel data model analyses the impact of diversification on small and medium-sized commercial banks in China.The empirical results show that the diversification reduces the profitability of small and medium-sized commercial banks in our country, and increase its risk at the same time, even though the value is small.Overall, diversification reduces the performance of small and medium-sized commercial banks in our country, but the negative effect is not significant. In addition, for the relatively high diversified banks, the negative impact of diversification on its profitability is little, but increases the risk in the meantime.Finally, combining with the result of empirical research and the influential factors of the diversification of small and medium-sized commercial banks in China, this paper puts forward six suggestions: the premise of improving the diversification benefits is the improvement of the government supervision mechanism; the fundamental of diversification is the consolidation of the main business; the goal of diversification is the characteristics of diversification; the basis of diversification is the cultivation of the talent and technology innovation; the top priority of diversification is the risk control; the key of diversification is innovation.