A Study On The Synergistic Effect Of Commercial Bank Business Innovation

After subprime crisis, how to promote the financial industry development by business innovation of commercial banks, and then promote economic development? This is the problem which scholars at home or abroad are concerned. Before the subprime crisis, academic researchers were studying the business innovation of banks with the model of mixed operation and they were paying attention to the synergistic effect of business innovation of banks with mixed operation. But, after the subprime crisis, scholars are reconsidering and questioning the model of American financial system and financial innovations. But China’s financial industry does not suffer much from the subprime crisis. Under the conditions, researchers are turning to study the business innovation of China’s banks, which are running with separate operation. The researchers expect China’s banking business innovation can answer the following questions:is there synergistic mechanism and synergistic effect with China’s bank separate operation and business innovation as that of mixed operation? If there is synergistic effect, what effectiveness it bring to commercial banks? How to measure the synergistic effect of China’s current innovation? It is important for us to study and solve the above problems, which will not only helps us deepen the theory of banking innovation, but also has great practical significance to guide the change of China’s operation mode and reform and development of the banks. This is the purpose of the paper.The paper studies and reviews the literature of the theory of financial innovation, synergy and synergistic effect of commercial bank business innovation, and analyzes the theory of the system of synergy, the synergistic effect and the measure; analyzes the synergistic effect of different banks business innovation, which begun in 1960s; based on that, the paper uses the data of China’s state-controlled banks and joint-stock banks to test the synergistic effect of China’s banks and takes out measures to promote the synergistic effect of China’s banks business innovation.The main contents of this article are as follows: The first chapter is introduction. This section mainly analyzes the background and the significance of the paper and introduces the idea, structure, contents, method and innovation of the paper.The second chapter is about the theory of bank business innovation and synergistic effect. In the section, we first study the contents and theory of bank business innovation. Secondly, we study the contents of synergistic effect and review the studies of scholars. Finally, we review the papers which study the use of the synergistic mechanism and synergistic effect in bank business innovation.The third chapter is about the synergistic effect of commercial banking business innovation. The section first analyzes the main elements of bank business innovation, and then explores the relationship between these elements in innovation. The author thinks we should determine the order parameter to create a collaborative system and we choose the technical element as the crucial factor. Secondly, the section analyzes the synergistic effect of innovation, such as management synergy, marketing synergy and financial synergy, and brings out the theory that the overall synergistic effect of innovation for banks is economy of scope and economy of scale.The fourth chapter is about the practical synergistic effect of innovation. Firstly, the section analyzes the history of innovation in developed countries, and then studies the synergistic effect of intermediary business, investment banking business, private banking, internet banking and mobile banking. Finally, the section takes the America as an example to analyze the history of innovation and draws the conclusion that there are both positive synergy and negative synergy in innovation, and then the paper takes Citibank as an example to explore the experience of managing innovation system.The fifth chapter is about empirical analysis of synergistic effect of China’s bank business innovation. The section first analyzes the situation and problems of China’s bank business innovation, and then use the translog cost function and the Box-Cox function to test the existence of synergy. Through testing, we find that the state-owned banks and joint-stock banks show the effect of economy of scope and economy of scale gradually, and the joint-stock banks have a stronger effect than the state-owned banks. The sixth chapter is about the advice for promoting bank business innovation and the synergistic effect. Based on the empirical analysis, the section first presents that the banks should improve the management system, and then suggests that the banks should set up incentive mechanism to encourage innovation and foster a spirit of a team to conduct innovation. Secondly, the section discusses the possibility of building coordination mechanism for regulatory departments. Finally, the section takes out advice to manage risks from the perspective of commercial banks and regulators.The seventh chapter is about the conclusion and outlook. The section first puts forward the main conclusion of this study, and proposes recommendations for further studying.