The Empirical Study On Bank Interest Margin And Its Determinants In China

Net interest margin(NIM) in banking system is not only the main source of profits,but also it affects people’s life in many aspects.In recent years,there is acute discussion about the level of NIM in chinese banking system. The marketization of interest rates have been progressed a lot in china and marketization will be more opened by time, so it is very significant to study on NIM and its determinants.I takes Normative Analysis and Empirical Analysis, Qualitative and quantitative Analysis, Static Analysis and Dynamic Analysis simultaneously in this article.The article is divided in five chapters:In the first chapter, I explained the definition background and significance of bank’s NIM.Then I analysed the relationship between related concepts and NIM, including the relationship of NIM with the profits of intermediary business and the benchmark interest margin.The conclusion is that net interest margin related little with intermediary business, but benchmark interest margin plays a great role in restricting floating range of NIM in banking system.The second chapter is about domestic and foreign literature review.Based on the theory existed, I derived the variables which influences on NIM and then taken the monetary policy variables and macroeconomic variables into factors system.The third chapter is comparative part. By comparison of Chinese banks with other banks, I founded that the level of NIM in Chinese banks is at medium. By comparison of state-owned banks、national joint-stock banks with city commercial banks, I find the sequence of NIM level in the three kinds of banks listed above is that city commercial banks、national joint-stock bank、state-owned banks. By comparison of domestic and foreign banks, I found that now, domestic banks has inherent advantages in profitability and foreign banks needs to improve the ability to achieve high level of NIM. The fourth chapter is the focus in this article.I selects44domestic banks from BANKSCOPE database.In this chapter, firstly I take multicollinearity and smooth test. Secondly, by the F test and the Hausman test, I determined to use fixed effect model as the fittest model.Thirdly, I builted the whole sample model、the sub-category model and two-stage model to get more thorough conclusions.In the last, I make use of the quantile regression method to analysis the determinants in the sub-point level of NIM.The fifth Chapter is about suggestions.The banks in the whole banking industry need to further strengthen the risk management, enhance the ability of pricing interest rate and enhance the management level. State-owned banks should utilize its advantages of scale and focus attention on management quality; joint-stock banks need to strengthen cost management as to improve their operational efficiency; the city commercial banks should keep the level of liquidity risk at an appropriate level.The innovation in this article includes innovation in studying scope and innovation in empirical method.①Studying scope innovation is that I include foreign banks in the article,by comparing the diference between domestic banks and foreign banks,relevant conclusion can be produced.②The empirical mehod’s innovation is that I use quantile regression method to study the determinants of the sub-point level of NIM.