Research On The Influence Of Market Competition On The Performance Of Rural Commercial Banks

In 2006,in order to stimulate the vitality of the rural financial market,the China Banking Regulatory Commission issued relevant policies to adjust and relax the access to the banking industry in rural areas.After more than a decade of reforms and developments,China’s rural financial market has diversified its competition.The Central Document No.1 of 2018 emphasized "adhering to the correct direction of rural financial reform and development and improving the rural financial system suitable for the characteristics of agriculture and rural areas." In the field of rural finance,rural commercial banks have always played a key role,and at the same time,they have undertaken the arduous task that the state has given them to support and benefit farmers.However,many rural commercial banks have just experienced restructuring,low levels of commercialization,and historical burdens have not been fully clarified.Therefore,whether rural commercial banks can withstand the challenges brought about by changes in the market environment is an issue that deserves attention.At present,most domestic and foreign studies focus on the direct relationship between market competition and rural commercial banks,and there are few empirical studies on the specific path and mechanism of market competition affecting rural commercial banks’ operating performance.Besides,the marketization of interest rates is accelerating and the deposit and loan business is becoming saturated.The asset-light operation has gradually become its choice to expand profitability.Therefore,this article takes China’s rural commercial banks as the research object,and takes the bank’s intermediate business level as the intermediary variable,and explores the mechanism and specific role of the market competition level on the rural commercial bank’s operating performance.First of all,this paper analyzes the impact of market competition and bank intermediary business development on the performance of rural commercial banks based on theories of industrial organization,modern rural finance,and financial innovation.At the same time,the bank’s intermediate business level is used as an intermediate variable to analyze its intermediary mechanism in this influence path,and put forward the research hypothesis in this paper.Subsequently,this article uses the sample data of 48 rural commercial banks nationwide from 2012 to 2018 to build models and empirical analysis tests.Sobel test is selected as the method of mediation effect test in this paper.The final empirical results show that:market competition has significantly weakened the operating performance of rural commercial banks,and the operating performance of rural commercial banks located in more developed areas has been greatly affected;the more intense the market competition,the greater the proportion of rural commercial banks’ intermediate business.The level of intermediate business is relatively high;in rural commercial banks located in more developed areas,the greater the proportion of intermediate business,the worse the level of business performance.For rural commercial banks located in less developed areas,the greater the proportion of intermediary business,it can further improve the operating performance of rural commercial banks in less developed regions;the level of intermediary business of rural commercial banks has an intermediary role in the impact of market competition on their operating performance.Finally,based on empirical conclusions,this paper proposes countermeasures and suggestions from the aspects of improving the rural financial market competition mechanism,developing bank intermediary business reasonably,creating a good external policy environment,and optimizing its own management system.