Research On The Factors Affecting Commercial Banks’ Net Interest Margin In China

From a macro perspective,a stable financial market is a necessary condition for a country’s economic development.It can provide a steady stream of liquidity for enterprises.At present,China’s financial market is still dominated by indirect financing.As a financial intermediary,the situation and future development trend of commercial banks have a significant impact on the economy of the whole country.From a microscopic point of view,from large enterprises to small individuals,daily production and life are inseparable from commercial banks.We enjoy the services of commercial banks every day,and their business operations are the guarantee of our convenient life.In recent years,China’s economy has entered a period of transition,and the growth rate of macroeconomics has slowed down.At the same time,China’s interest rate marketization reform has been initially completed,and the regulatory intensity of the regulatory authorities on the banking industry has also been rising.Under such circumstances,The net interest margin of China’s commercial banks has continued to fall.The net interest margin is an important indicator to measure the profitability of commercial banks,which is equal to the ratio of the bank’s net interest income to the bank’s total interest-earning assets According to the level of net interest margin,we can judge the management level of China’s commercial banks,which is also an important basis for judging the financial environment of China.Previous studies have shown that both the internal factors of commercial banks and external factors may affect the level of net interest margin of commercial banks.The economic environment of each country varies from period to period,and the factors affecting the bank’s net interest margin will also be different.Therefore,when studying the factors affecting the net interest margin of commercial banks in China,it is necessary to conduct an in-depth discussion on the level of net interest margin of commercial banks in China in combination with the overall situation.Based on the theoretical knowledge and related literatures on the research of net interest margin of commercial banks at home and abroad,this paper conducts a comprehensive study on the influencing factors of commercial banks in China through theoretical analysis and empirical analysis.In the theoretical analysis part,this paper first introduces and sorts out the main research theories of the factors affecting the net interest margin,and then selects eight influencing factors for analysis based on the actual situation inChina.In the empirical analysis part,this paper takes the financial data and regulatory indicators of 50 commercial banks in China from 2009 to 2017 as observation samples,and analyzes the models by selecting individual factors,industry factors and macroeconomic factors.In order to better observe whether the commercial banks will have different effects on the net interest margin due to different types in the current environment,this paper has established state-owned commercial banks and joint-stock commercial banks on the basis of the whole sample.Four sub-samples of city commercial banks and rural commercial banks are used to study the differences in the factors affecting their net interest margin.The empirical results show that for the banking industry,risk aversion,management efficiency,credit risk and industry concentration are significantly positively correlated with net interest margin,while bank size,non-interest income,and money supply were significantly negatively correlated with net interest margin.In this regard,this paper puts forward some suggestions: First,China’s commercial banks should strengthen their management capabilities,attach importance to the control of risks and costs,and constantly improve the system of prevention and response to risks.Second,commercial banks should develop intermediate and off-balance-sheet businesses and innovate financial products to cope with the impact of interest rate liberalization.Third,commercial banks should return to their own sources,provide accurate services to key customers and businesses,and recognize the scope of your business to increase the benefits of traditional and non-traditional businesses.This can also improve the ability to fully serve the real economy.At the same time,for the empirical results of the sub-type samples,this paper also put forward targeted recommendations.