The Impact Of The Diversification Of Commercial Banks' Income On Its Stability:Theoretical And Empirical Research

In 2015,the PBC continuously reduced the interest of financial institutions for five times,and further liberalized the upper limit of the deposit interest rate of the rural cooperative financial institutions.The interest rate marketization reform in China has an increasingly impact on the social entity economy and financial market.With the accelerate the process of interest rate market,growing Internet financial and financial disintermediation,a new force suddenly rises and makes the society further broaden the financing channels,China's banking industry is facing a decline in profit margins,market competition and increase the level of risk and a series of challenges.Facing the increasingly fierce competition environment,China's commercial banks have begun to transform their business concepts and innovative business models,and actively explore the development of non interest income businesses other than traditional interest businesses.The diversified income structure of banking industry is gradually replacing the single profit mode dominated by deposit and loan business.The income diversification strategy has become an effective way for more and more commercial banks to improve their core competitiveness and maintain stable operation.However,at the same time,we should also notice that the diversification of income will inevitably involve more extensive risk areas in the process of rapid expansion of banking business,which will adversely affect the stable operation of commercial banks.As the most important part of the whole financial system,the healthy and stable operation of commercial banks is closely related to the orderly operation of the whole financial market,and closely related to the lifeblood of the national economic development.Only by developing diversified income on the basis of stable operation can commercial banks achieve their own value,profit goal and stable operation so as to contribute to people's livelihood and national economy better.Therefore,exploring the impact of diversification of commercial banks on their stability and creating a better financial market environment is of great practical significance at this stage.Based on the systematic analysis of the present situation of China's commercial banks' income diversification,this paper qualitatively analyzes the mechanism of the diversification of commercial banks' income on their stability from two aspects: positive and negative effects.Selection of commercial bank Chinese empirical data of 2009-2016 years,with the CAMELS rating system,Chinese financial stability report and the CBRC supervision indicators as a guide,comprehensive evaluation index measuring the BSI stability of Chinese commercial banks,and establish the regression model to explore the impact of income diversification on the stability of commercial banks in China.The results show that: no matter what type of commercial banks,income diversification has a significant promotion effect on its stability;fee and commission business income business in the development also enhanced the stability of commercial banks;and other non interest income is on the stable operation of different types of commercial banks caused negative influence.Therefore,in the process of developing and innovating business,commercial banks in China should combine their own actual operating conditions,but they should not blindly expand.On the basis of recognizing the scale of development and operation status quo,we should carry out transformation operation,pay attention to the quality of non interest income business rather than quantity,so that we can diversify our income and better serve our real economy and promote the development and perfection of financial market.