The Research On The Effects Of Diversification On Operating Performance Of Commercial Bank

With the deepening of financial reform and the "three phase superposition" of the new economic normal,the diversification of banks has become an inevitable trend under the complex economic and financial situation.With the promotion of interest rate liberalization and other important financial market reforms,commercial banks are actively involved in securities,insurance,trust,leasing and other non-banking businesses,accelerating the development of intermediary business and expanding the proportion of non interest income.In order to settle out prominent problems about regulation compliance,risk management,use of funds and short-term interests' pursuit,the [2017]53 notice of the banking regulatory office requires special rectification of "improper innovation,improper trading,improper incentives and improper fees",which requires financial innovation of commercial banks to match their risk bearing capacity.In 2017,The National Conference on Financial Work also pointed out that we should standardize the intermediate business links,standardize the combination of comprehensive operation and industrial finance,and strengthen the responsibility of financial institutions on risk management.The diversification of China's commercial banks is bound to go ahead in the wave of financial reform.It is of great theoretical and practical significance to explore the impact of diversification on the performance of commercial banks and grasp its inherent laws,which is good for banks' upgrading and sustainable development.This paper sorts out three mechanisms of diversification,which are resource sharing mechanism,risk smoothing mechanism and market competition mechanism,and analyzes the current situation of diversification of commercial banks in China.Based on the background of interest rate marketization,through the improved diversification index,this paper takes 47 Commercial Banks in China for 2006-2016 years as the research sample,and empirically examines the impact of diversification on the performance of commercial banks.In the empirical study,the impact of interest rate marketization on diversification,the impact of diversification on bank performance and the effect of interest rate marketization on the diversification effect are examined through two progressive hypotheses.The result of empirical research shows that interest rate marketization is closely related to the degree of diversification.The overall diversification effect of commercial banks in China is not significant yet,and commercial banks are in thetransition period from traditional credit business to diversified business development.Sub sample test results show that diversification has a more significant positive impact on the state-owned commercial banks,but it has a more negative impact on the joint-stock commercial banks,and its' influence on the performance of city commercial banks is far less than traditional factors like the net interest margin,deposit ratio and other factors.Interest rate liberalization strengthens the positive impact of diversification on state-owned commercial banks,and weakens the negative impact on joint-stock commercial banks,and has no significant moderating effect on the diversified performance of urban commercial banks.According to this,this paper puts forward the countermeasures and suggestions to improve the quality of diversification from bank and government angles.