Research On The Impact Of The Development Of Non-interest Income On The Stability Of China's Commercial Banks

In recent years,as the financial disintermediation accelerated,the interest rate marketed and the internet finance developed rapidly,the environment and business model of banking operation has changed dramatically,the profit margins of commercial banks relying on the traditional credit model continues to shrink,China's commercial banks have began to change the traditional business model and strongly develop non-interest income business to increase profit.However,the effect of the income diversity on the stability of commercial banks is uncertain: on the one hand,the income diversity helps commercial banks spread risk,non-interest income such as trust services,settlement business,asset custody has the characteristics of safety and high profit margins,which can increase the stability of commercial banks;on the other hand,compared with the interest income,the volatility of non-interest income is larger and the leverage is higher,so it will reduce the stability of commercial banks.Based on these,this paper attempts to study the specific effect of non-interest income on the stability of commercial banks from the perspective of the empirical evidence.First of all,on the basis of previous research,this paper clarifies the definition and classification of non-interest income of commercial bank,examines thorough analysis of the status quo of non-interest income business of 16 listed banks in China from 2005 to 2014,and through international comparison,it finds the exsiting problems;Secondly,This paper analyzes the effect of non-interest income on the stability of the commercial banks from the aspects of the theory;Thirdly,this paper uses a Z-value model which based on VaR to measure the stability of commercial banks,and studys the effects of non-interest income business and its components on the stability of China's commercial banks by using the data of 14 listed banks from the first quarter of 2008 to the fourth quarter of 2014.It indicates that non-interest income business of China's commercial banks is still in its initial stage of development and it is positively related to banks' stability.For its composition,net fee and commission income is significantly positively related to banks' stability,while other non-interest income is non-significantly positively related to banks' stability;Finally,based on the empirical analysis,this paper puts forward policy suggestions on the effective development of non-interest income of commercial banks in China,in order to maintain the stability of the banks while they vigorously expanding non-interest income.