A Study On The Transition Of China's Retail Banking Business

Nowadays,economic situations at home and abroad have changed.Internationally,the explosion of subprime debt crisis forced the American investment banks to join the traditional commercial banks for their own sake,which aroused introspection within the banking industry.Domestically,economic growth in China has continually slowed down recent years.Along with the deepening of interest rate marketization,the establishment of multi-level capital market,and the presence of internet finance,commercial banks are facing huge problems,including deterioration of asset quality,squeezed developing space,lost clients.In such a background,those who once relied on net interest income must transform their business model for survival.Though many banks have set different strategic transitional goals separately,we can still find out a consistent trend.That is to develop retail banking.For this reason,we will focus on the transition of China's retail banking in this paper.This thesis first analyzes the current situation of retail banking business,and then summarizes the transition plans of domestic commercial banks.Second,for clarifying future transition direction,12 commercial banks are chose.To demonstrate the relationship between traditional as well as nontraditional retail banking business and profitability,we practice empirical study on data from 2008 to first half of 2016.The result shows that increase in retail NIM and the trend of comprehensive operation have significant positive effect on the profitability of commercial banks,and retail NIM is a major factor to profitability.Last,the thesis digs into the developing experience of international retail banks,based on which we make suggestions concerning community banking,wealth management and consumer financing areas.We advocate that small and middle banks should strengthen the transition to community banks,while large banks can learn the branch-establishing experience from community banks.Second,in order to better serve the high net worth clients,products and services must be differentiated.Last,banks are supposed to grasp the opportunities to develop consumer financing.Innovations of this thesis are as follows.First,micro data from commercial banks are used in the empirical study,concerning how traditional retail banking business and retailnoninterest income business affect profitability.Second,we systematically summarize the successful cases of international retail banks,and raise several transitional advices with bank's size and type factors into consideration.