The Effect Research Of Income Diversification On The Performance And Risk Of Commercial Banks In China

For a long time,the commercial banks in China mainly take the interest rate difference between deposit and loan as the main source of income,and have gained a lot of profits,but at the same time,they also rely heavily on this profit and development mode.Especially in recent years,with the completion of the reform of the interest rate market,rapid rising of Internet bank and with the increasing opening-up of the Chinese financial markets and the banking sector,so in those backgrounds,it is difficult to lend funds at high interest and borrow funds at low interest.In this case,it is a common choice for commercial banks in China to expand the source of commercial banks’ income and develop the diversification of income.However,due to historical and institutional reasons,Chinese commercial banks’ income diversification starts late,of course,there is a shortage in products and services.These are different from the western developed countries’ banks.In order to study the impact of income diversification on the listed commercial banks and diversify their income,the article firstly analyzes the development and current status of the diversified income of listed commercial banks in our country and finds that the interest income in the income structure still occupies a higher proportion,but the growth is gradually slowing down.Among which,the major credit business of interest income is mainly concentrated in the wholesale business.The non-interest income accounts for a relatively low proportion,but the growth rate is relatively fast.Meanwhile,the development of non-interest business between commercial banks is far behind.And it is based on fee and commission income.Then article summarizes the influencing factors of income diversification of listed commercial banks,including interest rate marketization,financial disintermediation,capital supervision and big asset management era.Based on the theory of asset portfolio,range economy,diversification,financial innovation and other related theories,combined with the characteristics of each part of income,this part analyzes the theoretical analysis of the impact of diversified income on the performance and risk of listed commercial banks,and provides theory in accordance with.In the empirical part,this article selects the financial data of 16 listed commercial banks from 2007 to 2016 to study the impact of income diversification on business performance and risk,and divides commercial banks into three categories: large-scale banks,joint-stock banks and city commercial banks.The DIV index,as a comprehensive measure of income diversification,uses ROA and ROE to measure the bank’s operating performance and measures bank risk using bankruptcy risk,credit risk and earnings volatility risk.The empirical research is carried out through the method of generalized moment estimation.The results show that income diversification has different impact on the operational performance and risk of different commercial banks.Specifically,income diversification helps to improve the overall operating performance of large commercial banks and joint-stock commercial banks,but not conducive to the improvement of business performance of city commercial banks;the earnings volatility of joint-stock commercial banks and city commercial banks is significantly increased,It will not increase the profit volatility of large commercial banks.The impact on the bankruptcy risk of large commercial banks is not significant,which increases the risk of bankruptcy of joint-stock commercial banks and reduces the bankruptcy risk of urban commercial banks.At the same time,it can reduce credit risk of the three types of bank.Based on the above theoretical and empirical analysis,combined with the current situation,article puts forward the reasonable development of income diversification,clear their own emphasis and characteristics,strengthen the comprehensive management level,the implementation of differentiated regulatory measures,attach great importance to the cultivation of the introduction of talent five development income diversification suggestions.