Research Of The Commercial Banks' NII Affecting On Operating Performance

The main income source of commercial banks in china so far is to earn the interest spread between deposit business and loan business. Yet, non-interest income business has not drawn enough attention. In recent years, affected by the financial disintermediation, the compression of interest spreads between savings and loan business and many other factors,diversification of revenue structure becomes an inevitable trend in the development of China's commercial banks. That's why commercial banks gradually began to realize the importance of non-interest income so that they pay much to develop non-interest income business. However, whether non-interest income can improve operating performance remains a question to be discussed. This paper selected the data from 2007 to 2013 of 16 listed commercial banks as samples. Using "panel threshold model" proposed by Hansen (1999) to study the relations between non-interest income accounted for the proportion of total revenue and operating performance, while comparing the result with it gain from doing fixed-effect test. The research found that there is a negative correlation between the non-interest income accounted for the proportion of total revenue and operating performance of commercial banks,and such negative correlation in the threshold is significantly higher than that in the fixed effects model. The result of panel threshold effect model shows that there are two thresholds.When the non-interest income proportion is higher than these two thresholds, the negative correlation mentioned above will be weakened. In such case, the increase of non-interest income can improve the operating performance of commercial banks. Finally, the conclusions of this paper made a further explanation of the analysis, and put forward some proposals to develop the non-interest income business of China's commercial banks.