Research On The Impact Of Soft Budget Constraint Of Commercial Banks On The Development Of Non-interest Business

With the rapid economic growth in China,the reform of the economic system has continued to deepen,and a series of major and profound changes have taken place in the financial system.The emergence of interest rate liberalization and the derivatives tool market have broken the original financial competitive environment.The core of the financial system,commercial banks,has brought great challenges.The traditional profit model of commercial banks mainly depends on deposit and loan spread income.However,with the advancement of interest rate liberalization,the stability of spread income has been declining,and relying solely on the traditional profit model has been difficult to sustain.In this context,the development of non-interest income business has been valued by commercial banks.Non-interest income,as one of the components of income,plays an important role in optimizing the profit structure and stabilizing profit growth.Therefore,vigorously expanding non-interest income and creating more profit growth points have become the common development trend of banks.Given the increasing importance of non-interest income business,it is necessary to analyze the relevant factors affecting non-interest income,especially the impact of key factors on non-interest income.This is precisely the purpose of this paper.In China,due to historical and institutional reasons,commercial banks generally have the feature of high proportion of state-owned capital holding by the government,and this kind of equity structure makes it easy for banks to receive government intervention and undertake some policy loan tasks.When the project causes losses.When it is difficult to solve,the government will often provide assistance to the banks.This in turn causes banks to form expectations for the government's rescue stability,ignoring their own risk control and business development,and creating serious budget soft constraints.How the existence of budget soft constraints affects the development of non-interest business of commercial banks is the core of this article.After sorting out the relevant literature,this article summarizes the research results of the academic soft-constraints and non-interest-bearing businesses,and makes relevant remarks.Based on the conclusions of relevant literature,some factors affecting non-interest income are extracted.After that,it introduced the development of non-interest business and soft budget constraints in China's commercial banks.By reviewing the history of China's banking industry receiving government assistance and summarizing the research findings of relevant scholars,we can find that the holding of state-owned capital is the main government's control over commercial banks.The means is also an important reason for the soft budget constraint problem,which also provides a strong basis for measuring the soft constraint level of the budget.Based on the existence of the soft budget constraints of commercial banks,the hypotheses of three soft budget constraints affecting the development of non-interest business are presented in the theoretical analysis section.These include over-lending of non-interest-bearing funds,banker's ability not to be allocated to non-interest business,and sociality.The burden occupies non-interest business funds.The three hypotheses elaborate on how the existence of soft budget constraints affects the internal and non-interest businesses of commercial banks in terms of fund allocation and personnel.Based on the existence of the soft budget constraints of commercial banks,the hypotheses of three soft budget constraints affecting the development of non-interest business are presented in the theoretical analysis section.In the empirical part,this paper selected the data of the 14 domestic listed commercial banks from 2007 to 2016 after the publication of the new accounting standards.The sample covers different types of commercial banks such as large state-owned banks,joint-stock banks,and city commercial banks.Regarding the measurement of soft budget constraints,this paper uses the proportion of state-owned capital in the top ten shareholders of commercial banks as an indicator to measure the extent of budget soft constraints,and uses the influencing factors such as the total assets scale summarised in the previous article as control variables to introduce empirical models in the analysis.The conclusion of this paper is that for China's commercial banks,the degree of soft budget constraint has a significant negative correlation with non-interest income growth.The soft constraint of the budget has a significant inhibitory effect on the development of non-interest business,which is reflected in the high proportion of state-owned capital holdings.Banks are subject to a large degree of government intervention,bank operating decisions are intervened,funds cannot be fully utilized,and the proportion of non-interest income to the camp revenue is growing slowly and development is weak.According to the theoretical and analytical results,this paper puts forward some policy recommendations,including two levels of government and commercial banks,such as reducing the government's intervention in banks,clarifying the relationship between control rights and operating rights,and continuing to promote the market-oriented reform of commercial banks.It is necessary to strengthen the financial strength and increase the development of non-interest business so as to promote the development of non-interest business of commercial banks under the new financial norm.