Research On The Non-Interest Income Business’ Effect On The Chinese Commercial Banks

Along with the sustainable financial deregulation, increasing banking competition and the financal disinter-mediation, the advanced international banks started to make the non-interest income become the banks’ new profit sources from the 70s & 80s of the 20th century. The average non-interest income ration of the advanced international banks is about 40%, and the discontinuous innovation of the non-interest income business area emerges every day. Accompany with the foreign banks entried Chinese financial market, interest rate marketization constantly promoting and the domestic customers’ investment demands becoming diversified, the Chinese commercial banks’ traditional profit-earning pattern is facing the challenge.In order to study how the non-interest income business effect on the banks’ operation, the paper selected 16 listed commercial banks in A-share market as the research objects, using qualitative and quantitative analysis methods, induction and deduction methods, comparative analysis methods to study how the non-interest income business effect on the banks’ operation.The qualitative analysis method first defined the meaning and the characters of the non-interest income, and then discriminated the difference and the relation among the non-interest income intermediary business income and the OBSA income. Induced the foreign scholars’ theory and hypothesis of the non-interest income business. Analyzed the inevitability of Chinese commercial banks developing non-interest income business from the commercial banks’ viewing angle and the customers’ viewing angle. The paper collected the 2004-2013 10 years non-interest income business data of 16 listed commercial banks in A-share market, comparatively analyzed the scale and the structure of the non-interest income based on the time series and cross section unit. Classified the commercial banks by their kinds(stated-owned commercial banks,joint-stock commercial banks,city commercial banks), and compared the non-interest income scale and characters of the three kinds of commercial banks. Meanwhile introduced the legal supervision and management present situation of non-interest income business.The quantitative analysis mainly studied how the non-interest income business effect on the banks’ profitability and operating risk, and empirically analyzed the infuencing factors of the non-interest income business. In order to increase the research persuasion, when studied how the non-interest income business effect on the banks’ profitability, the paper analyzed from three perspective. First used the general research method, selected ROA as the explained variables and non-interest income ration as the explanatory variables, control variables were added into the regresssion equation too. The research result was that there was positive correlation between non-interest income and banks’ profitability. In order to study whether there is interactive relationship between non-interest income ratio and ROA, the equation eliminated the control variables and transformed the explained variables and explanatory variables. The research result was there was interactive positive correlation between non-interest income and banks’ profitability. Selected cost income ratio as the profitability factors, using sensitivity analysis and sensitivity coefficient to study how non-interest income effect on the banks’ profitability. The research result was most listed commercial banks’ non-interest income sensitivity coefficient to cost and income was positive number, sensitivity coefficient to cost absolute value was less than sensitivity coefficient to income. The sensitivity coefficient to cost income ratio was negative number. To develop the non-interest income business could reduce the banks’ cost income ratio. So the paper concluded the non-interest income business could promote the banks’ profitability. When studied how non-interest income business effect on the banks’ operation risk, the paper first studied the volatility of the non-interest income and then variance decoposed the volatility of the operating income. The research result was though the volatility of the non-interest income was lager but it declined fast and the non-interest income’s contribution ratio to operating income volatility was very small. To develop the non-interest income business could not increase the banks’ risk. Then based on the portfolio selection theory, the paper did the correlation test of non-interest income and net-interest income. The research result was that for most listed banks in certain years, non-interest income business helped the banks realized the diversified operation and reduced the risk. In the third part, the paper designed the banks’ operating risk factor, and analyzed the relationship between the non-interest income and the operating risk factor. The result was that non-interest income business could help banks reduce their risk. The paper defined the quantitative development and qualitative growth of the non-interest income business, and analyzed the influencing factors of the quantitative development and qualitative growth of the non-interest income business.In the last part of the paper, proposed the suggestions for listed commercial banks further developed the non-interest income business. The suggestions were to increase the non-interest income ratio, improve the non-interest income structure; to raise the independent innovation awareness, develop the new-type non-interest income business; to discover self-advantages, develop the differentiation competition; to perfect the prcing strategy of the intermediary business; to set up departments that in charge of non-interest income business;to cultivate the non-interest income business talents, develope network technology; to control non-interest business risk.