Research On The Impact Of China's Banking Market Competition On Bank Performance

As a financial intermediary,banks play an important role in the financial system.The development of banks,on the one hand,is subject to the national economic environment.and on the one hand,The development of banks have an huge impact on the development of the national economy.A real situation of the current Chinese economy is: China's economy has changed from high-speed growth to high-quality growth.On the one hand,the number of China's banking industry has been increasing,the market structure has changed,However,whether the changes in market structure can improve the economic benefits of banks? And Promote a more rational allocation of resources? On the other hand,the interest rate marketization process has been substantially promoted,and interest rate liberalization will inevitably impact the traditional business of banks.Then,can banks transform its business model,improve business performance and increase its market competitiveness? Adapting to this new environment? The development of the banking industry and the allocation of resources have an important impact on the development of the real economy and the stable development of the entire country's economy.Therefore,the research on the relationship between banking market competition and business performance has a guiding significance for Chinese banks.This paper first constructs a theoretical analysis framework to explore the impact of banking market competition on bank performance.Then,based on the combing of relevant theories,it puts forward two hypotheses based on Chinese,and then measures the Lerner index to analyze the degree of competition in Chinese banking industry.The degree of competition,and the number of branches of the bank are used to further verify the results.The data results show that the overall degree of competition in China's banking industry is increasing,and then the corresponding empirical model is established.Based on the quarterly data of China's listed banks from 2007 to 2017,The paper puts forward the hypothesis that the change of market competition has a double effect on the bank's business performance.The empirical test results show that there is a positive correlation between banking competition and bank performance.Combining with China's actual interest rate from the banking market,the paper analyzes the relationship between bank performance and net interest spread when the bank deposit and loan spreads narrow.The study finds that the narrowing of the net profit spread of the banking industry will reduce the traditional business of the bank.Revenue,but it will force banks to develop intermediary business and increase the proportion of non-interest income;for banks,the diversified business structure can not only improve the bank's revenue,but also improve the bank's defense against market risks;for the market,The increase in market competition and the reduction of monopoly profits in the industry can improve the efficiency of resource allocation.Finally,based on the current situation and the empirical results,this paper gives the following policy implications.First,moderately improve the market competition of the banking industry and form a good competitive environment,which is conducive to banks to improve business performance.Second,the promotion of interest rate marketization,the bank's deposit business and loan business will be affected,the narrowing of the bank's net interest spread will have a negative impact on the bank's earnings.Third,the increased competition in the banking market and the narrowing of the net interest margin will force banks to carry out intermediary business.The diversified business structure can enhance the bank's ability to withstand market risks and better play the role of banks in the financial market.