The Impact Of Non-Interest Business On The Profitability Of Commercial Banks

Under the double impact of interest rate liberalization and internet finance,commercial bank profits have fallen sharply.The bank hopes to expand its new profit channel by developing non-interest business and change its dependence on traditional deposit and loan business.This paper uses the unbalanced panel data of 105 commercial banks in China from 2008 to 2017 to establish a static and dynamic panel regression model.The empirical results show that non-interest business has a significant negative impact on bank profitability;income diversification has a significant positive impact on bank profitability.From the influence path of non-interest business,non-interest business of banks with high asset quality has a significant positive impact on risk-adjusted profitFrom the perspective of sub-samples,the non-interest business of state-owned banks and the diversification of income have no significant impact on bank profit.The main reason is that non-interest income and interest income of state-owned banks have a strong synchronous effect.When non-interest income and interest income fell simultaneously,the bank profit decreased sharply,but the proportion of non-interest income to operating income remained unchanged,and the degree of diversification of income did not change much,thus the impact of non-interest income and income diversification on bank profit is not significant.The non-interest business of joint-stock banks has a significant negative impact on bank profit,mainly due to the decrease in interest income of joint-stock banks,far exceeding the increase in non-interest income.Therefore,the growth of non-interest income cannot prevent the decline of bank profit,so the proportion of non-interest income has a negative correlation with profit.The empirical results of the city commercial banks are basically the same as those of the joint-stock banks,indicating that as the banking business continues to mature,the gap between the city commercial banks and the joint-stock banks in terms of asset size and business philosophy is narrowing.The difference between the two is that The equity ratio of joint-stock banks has no significant impact on the profit,while the impact of equity ratios of city commercial banks on the profit is significantly positive,indicating that most unlisted city banks are more difficult to use capital markets than listed joint-stock banks,the improvement of the core capital of the city commercial bank can significantly improve the bank profit.The impact of the trading income of the rural commercial bank on the profit was significantly negative,the equity ratio had a significant positive impact on the profit,the non-performing loan ratio had a significant negative impact on the profit,indicating that the rural commercial bank should pay attention to supplement the capital and improve the ability of credit risk management.