Research On Performance Evaluation Of Listed Commercial Banks In China Based On SEM

In recent years,the China’s financial market is facing many challenges due to the complicated economic situations from national and international.Serving the real economy,deepening financial reform,and preventing financial risks have become the main tasks of financial work and the guides for financial institutions.Macroeconomic is in "economic new normal" that increases significantly downward pressure on the economy.Listed bank,as an important carrier of our national economy,plays important parts of unblocking transmission mechanism of monetary policy,reducing financial leverage,preventing systemic financial risks and so on.In addition,the introductions of "new regulations on capital management" and "new regulations on financial management" have created strict supervision environment to promote the standardization of "capital management business" of listed banks.However,domestic banks would have disclosed many problems of asset quality due to "three periods overlapped".Listed banks should make up capital to reduce business risk,because of slower core deposit growth,worse financial management,higher capital restricts.Some banks began to reduce the pressure on capital by slowing down the growth of asset size.But it is unsustainable to use endogenous capital to make up capital,because of lacking of net profit growth.Therefore,in order to promote listed banks to fulfill duties in the economic fields,it is urgent to make an evaluation of its performance and put forward suggestions to optimize its performance level.The paper is divided into four parts.In the first part,the performance category of listed commercial banks has been defined,explains its theoretical basis and influencing factors,and combs and contrasts the traditional evaluation methods and then applies the structural equation model more innovatively evaluate the performance of commercial banks.In the second part,it is to evaluate listed banks’ performance by establishing the structural equation model that the second-order potential variable with performance,profitability,liquidity,safety and growth as the first-order latent variables,and the 10 indicators such as return on assets as observed variables.In the third part,the panel data model is built to verify the differences in the performance of listed commercial banks.The internal factors of bank size,innovation capability and shareholding structure and external factors of macroeconomic conditions are used to empirically testing how the factors affect the performance.The fourth part proposes some suggestion of the performance based on the current performance of listed commercial banks in China.The study finds that: 1.Profitability,liquidity,safety,and growth are positive factors of the listed banks performance level.2.The trend of the performance level of listed commercial banks presents inverted “N” shape that indicates that China’s listed banking industry is pro-cyclicality.The fluctuation of the economy affects the performance of listed commercial banks.3.It can be seen from the comparison of the performance of different types of banks that the performance trends are similar.But there are significant differences in performance levels among them.The performance of urban commercial banks is the best,while the performance of state-owned banks is the worst.4.Asset size,non-interest income ratio,equity concentration and leverage have negative impact on performance,while nominal gdp and m2 growth rate have positive impacts on performance.It shows that the expansion of business volume has not improved resource utilization,the equity concentration is too centralized to bring agency problems,which increase agency costs and business innovation expands its income structure and income source so that increased risk exposure.Based on the theoretical and empirical analysis,the research results have guiding significance for optimizing the performance of China’s listed commercial banks.The paper puts forward four suggestions.Firstly,rationalize the scale of operation and expand the scale economy effect.Secondly,effectively promote financial innovation and change bank profitability mode.Thirdly,moderately diversify the shareholding structure and improve internal governance mechanisms.Finally,downgrade market access restrictions and improve competition efficiency.The innovation of the paper is to incorporate the profitability,risk,liquidity and growth of the listed commercial banks into the performance evaluation system.According to the theoretical analysis,this paper constructs the structural equation model to evaluate the performance,which consider and quantify the correlation between profitability,risk,liquidity,growth,and meets with the objective reality of the performance of listed commercial banks.The paper makes up disadvantages of most researches without incorporating operational risk into the performance evaluation system or not considering correlation of profitability,risk,liquidity and growth.