Research On The Impact Of Commercial Banks Diversified Financial Services On Its Return And Risk

As the development of financial internationalization,financial liberalization and financial integration and the advance of information technology and financial innovation from the 1980's,the competition between different banks was getting more and more intense.In order to maximize the profit,commercial bank from different countries proceed development with diversified business.Financial industry has been implemented separated management for a long time in China,which leads to the less various Bank product and the single structure,even bank management relies heavily on traditional credit business.Recently,with the deepening of financial reform,such as the accelerated marketization of interest rate,financial"disintermediation" and the impact of the internet of finance,the development space of traditional deposit and loan business has been greatly narrowed.After realizing the importance of the diversified financial services,the commercial bank of China changes the mode of business operation gradually,and the non-interest income business,including procedure fee,commission income,Investment income and exchange earning,have been great improved,which forms the diversified income structure.The development of the diversified financial services has enriched the income of commercial bank,and increase the profit by improving funds utilization and asset liquidity.However,multiplex management makes it harder to control the risk,because the big volatility of non-interest income poses a threat to the total income.Therefore,the development of the diversified financial services may greatly effect the performance and risk of commercial bank,and becomes a important research project of commercial bank area.In order to investigate whether commercial banks'diversified financial services could improve earnings and reduce in our country,this thesis analyze the problem from the theoretical and positive aspects,trying to refine the income structure and stabilize the income source of commercial bank,and provide effective advice for the sustainable development of commercial bank.This thesis is described in the following six chapters:Chapter 1,introduction.Firstly,we explain the background and the importance of this research topic is given;Secondly,the relevant literature both at home and abroad was commented and summarized.Finally,the research routing and method as well as the content are introduced,and the innovations and shortage are also pointed out.Chapter 2,basic concepts and theory.Firstly,the basic concept of diversified financial services of commercial bank is described;Secondly,the mechanism of how the diversified financial services effect the performance and risk of commercial bank is analyzed theoretically.Chapter 3,the development status and causal analysis of the diversified financial services of commercial bank.Firstly,the impact on the performance of commercial bank by the diversified financial services is analyzed from scale of the interest income and non-interest income and the structure of non-interest income;Secondly,the impact on the risk of commercial bank by the diversified financial services is analyzed from relevance and volatility between the interest income and non-interest income;At last,the reason why the diversified financial services is needed is analyzed from the accelerated marketization of interest rate,financial "disintermediation" and the impact of the internet of finance.Chapter 4,empirical analysis of the impact on the performance and risk by diversified financial services of commercial bank.Firstly,We use a balance panel dataset sample from our country covering the period between 2005 and 2014,for a total of 20 banks,and construct a panel data regression model.Then we use the risk-adjusted ROE as the income index,Herfindahl index and non-interest income of revenue as the diversity index of financial services,the Z value indicators to measure the bank management risks,and choose asset structure,the total assets of logarithmic ratio,the growth rate of assets and equity as control variable.According to the Hausman test results,we establish the random effect or fixed effect model and empirical analyze the impact of large commercial Banks and small and medium commercial bank financial services on its earnings and risks.The empirical results show that the diversified financial services increased the profitability of commercial Banks;Diversified financial services and bank returns is inverted U-trend,and there is an optimal value of the degree of diversified financial services;Large commercial banks diversified financial services and banks' risks is also inverted U-trend,there is an optimal degree of diversified financial services makes risk diversification best;Improving diversified financial services cannot reduce small and medium-sized commercial banks' risks.Chapter 5,conclusion and policy advice.Firstly,result is concluded according to the empirical study.Secondly,policy advice on the diversified financial services is given from macroscopic and microscopic view.On a macro level,extend the limitation of bank management system and establishing and perfecting laws and regulations are introduced,on a micro level,the commercial bank need control the ratio of non-interest income,improve the new services and products,increase technology and intellectual investment and strengthen the cooperation with non-financial institution.Finally,the directions for future research is proposed based on the the shortage of the thesis research.