The Study On The Impact Of Asset Diversification On The Performance Of City Commercial Banks In China

City commercial banks are developed by the city credit cooperatives,and they focus on small and medium enterprises.At present,there are 133 city commercial banks in China,playing an important role for the local economic prosperity and development.In recent years,with the marketization of interest rate,financial dislocation and Internet finance development,financial integration deepening,the banking industry is to adapt to change and explore the road of diversification.Diversification is one of the focuses of academic circles,and there are many researches on diversification.At present,there is no definite conclusion about whether to diversify,and the theoretical research on the diversification of city commercial banks in China is still immature.For a long time,the main source of income is the interest income for the city commercial banks,the main expansion means rely on deposit and loan business.However,due to the acceleration of interest rate marketization process,this model is unsustainable,diversification has become a new breakthrough in development of city commercial banks.Small and medium-sized commercial banks generally have the advantages of scope economy,and the diversification of assets business of city commercial banks can help them improve operating performance and management ability.However,whether diversification of asset business can improve the performance of city commercial banks and improve profitability under the premise of risk control,there is still some controversy.This paper selects 133 city commercial banks in China,and studies the influence of asset business diversification on the profitability,risk and growth of city commercial banks in China.The research ideas of this paper are as follows:The first chapter is introduction.The background and significance of the research are expounded,and the relevant literatures at home and abroad are summarized.Then,the paper structure andmethods are introduced,and possible innovation points and deficiencies arepresented.The second chapter is the theoretical analysis of the influence of asset diversification on the performance of commercial banks.Firstly,the definition ofasset diversification is defined,secondly,the paper analyzes the influence of assetdiversification on the profitability,risk and growth.The third chapter is the analysis of the basic situation of the the asset diversification about city commercial banks in China,the analysis of the current situation of asset diversification and the problems faced by it are discussed.The fourth chapter is the empirical analysis on the effect of asset diversification of city commercial banks in China.Collecting the financial data of 133 city commercial banks in China from 2007 to 2016,raising three presumptions,building Panel Smooth Transition Regression(PSTR)model,analysising the effect of asset diversification on performance(profitability,risk and growth),and conducting sensitivity analysis.The fifth chapter is conclusion and policy suggestion.First,the empirical conclusions are extracted,then the corresponding policy suggestions are put forward based on the empirical conclusion and the problems faced by city commercial banks.The empirical results show that:on one hand,the asset diversification can reduce risk,on the other hand can improve growth,and does not have significantly impact on profitability,but as the asset diversification degree deepening,the role-to reduce risk weakens,the role of enhancing growth disappear into lower growth.Therefore,asset diversification can improve bank performance,but with the asset diversification degree deepening,impact on performance may disappear,so city commercial banks can’t expansion of diversification blind.The results of this paper provide new evidence for better understanding the relationship between the asset diversification and the performance of city commercial banks in China.Based on the empirical results,this paper suggest city commercial banks to carry out the diversified the assets of the business,improve the level of risk control and internal management efficiency,and can be considered to"large asset management companies" and "big investment banks" transformation,at the same time,to go the characteristic development road,prudent to operate across regions.