An Empirical Study On Profit Model Transformation Of China’s Commercial Banks Under Interest Rate Marketization

China has been engaged in interest rate reform. Especially in2014, China canceled thefloor of loan interest rate, China’s interest rate reform has made breakthrough progress. Theinterest rate market marketization reforms as a major revolution in Chinese financial sectorwill fundamentally change the operational mechanism of China’s financial markets.Commercial banks as an important part of the financial system bear the brunt of the impact ofthe interest rate marketization. After the interest rate marketization, commercial banks willhave the right of interest rates pricing independently. Due to the gap between the lending rateand the deposit rate narrowed, the international experience shows that interest income ofcommercial banks will face a huge crisis after the interest rate marketization. However,China’s commercial banks operating income are mainly from interest income. Depending onthe single profit model of the number and gap with high capital consumption is bound toencounter blow the in the interest rate marketization. So, commercial banks need to adjust theexisting revenue model to achieve significant development.Firstly, the article defines the object of study, introduces the relevant theories and results ofexisting research of scholars on the interest rate marketization and profit model of commercialbanks, they are the basis of the later research. Secondly, the article reviews the process ofmarketization of interest rates and existing profit model of China’s commercial banks, as wellas the crisis facing under interest rates marketization, points out the need for thetransformation of profit model of commercial banks. Subsequently, the article studyempirically on Chinese commercial bank profitability model transformation problem from thelevel of profitability and profit structure two aspects. First, regression analysis on bank assetearning rate and degree of marketization of interest rates, interest income, assets scaleand GDP of panel data was carried out by using of entity fixed effects model. Second, we use stepwise regression method to analysis the profit of the structure and the marketization ofinterest rate, the scale of assets, the credit scale, capital constraints, and the concentrationdegree of market, capital market development and customer demands. Samples are dividedinto state-owned commercial banks and non-state-owned commercial banks were detailedanalysis, then find out the key influence factors. Through the study of these two aspects, thispaper provides a theoretical basis for the profit model transformation on the purposes ofimproving the level of profitability and optimizing the profit structure. Finally, taking thecommercial banks as a complex system, the suggestions are put forward on China’scommercial banks profit model transformation from the five basic activities and supportactivities with the idea of the value chain.