Influence Of Income Diversity And Variations Of Commercial Banks On Operation Performance

Recent years have witnessed profound changes of China's financial pattern.The emergence of Internet finance,the interest rate marketization and the broadening of direct financing channels have brought numerous opportunities for the business operation of commercial banks.Therefore,the transformation of operation strategies,the improvement of the structure of assets and liabilities and the income structure and the diversification of bank business have become inevitable choices for China's commercial banks.How is the influence of income diversity of commercial banks on operation performance? Which income types and variations have a positive influence on operation performance of commercial banks? The previous academic researchers did not come to unified conclusions as to these problems.This paper mainly studies and analyzes influence of diversifying income of commercial banks and income variations on their operation performance,and fully expounds on the influence trend of income diversity on commercial banks at an attempt to provide theoretical support for operation and management decision-making of China's commercial banks.The scope economy theory,the asset portfolio theory and the new business strategy theory are adopted to provide references for diversified income business operation of commercial banks and the theoretical basis for building the empirical model.Based on financial data of commercial banks from 2007 to 2014 and the basic model of diversified indexes constituted of interest income and non-interest income,the extended model for diversified indexes constituted of sub-items of non-interest income is built,and regression analysis is conducted of the model.As to the empirical research into the influence of income variations of commercial banks on operation performance,the same data samples and different variables are used.After the secular trend part is eliminated with the HP filtering,the multivariate linear regression model reflecting influence of variations of income and its sub-items on operation performance is built.According to empirical results obtained through regression analysis of the model,the author comes to the following conclusions:First,diversification of the income structure of commercial banks is conducive to improvement of banks' performance.Results suggest that the diversified income development mode of commercial banks plays a positive role in boosting operation performance either in terms of their non-interest income percentage or the income diversified indexes and non-interest diversified income indexes.Second,commercial banks cannot improve their profitability through unlimited diversification of business.There should be a relative balance between the non-interest income percentage and the traditional interest income percentage.Only in this way can the effect of income diversification be maximized.Thirdly,as to the influence of income fluctuations of China's commercial banks on operation performance,the fluctuation of the annual interest income growth rate has the greatest influence on banks' operation performance.However,in recent years,the interest income has been greatly influenced by the economic environment,and the operation performance is also seriously affected.Therefore,commercial banks should immediately develop the income diversification strategy so as to be more competitive.