The Analysis On Relationship Of Commercial Banks’ Diversification And Operational Efficiency In China

In recent years, with the development of China’s economy and large of theforeign banks enter into China after the protection of WTO, which has brought atremendous impact to China’s listed banks’ traditional business. In response to thefierce market competition, China’s listed banks increasingly become pluralisticoperation: developing the intermediary business on the basis of traditionalasset-liability business. As a result, China listed commercial banks have reduced theconsolidated operating costs and increase operational efficiency throughdiversification. Diversification has become an important business strategy to listedcommercial banks, the research to operational efficiency become more realistic andtheory significance.This paper intends to combine the theoretical analysis and empirical analysistogether, and then introduces the diversification theories and management theories ofgeneral into our commercial banks. In this paper I take four Chinese state-ownedcommercial banks and twelve shareholding commercial banks as the researchexamples, and construct the Linear Regression model with E、ROA、TQ and NPL etc,after the empirical analysis I’ll give my advices on how to improve China’scommercial banks diversification operation.Based on the existing literature of domestic and aboard, at the first part of thispaper, discussed the meaning of diversified management, and then analysis thediversified operation’s influences of operation performance. Secondly, this paper briefdiscussion of China’s listed commercial banking business structure evolution, andthen analysis the existing problems which China’s commercial companies has faced.Thirdly, with the diversification index with E、ROA、 TQ and NPL etc, I chooseempirical analysis on the influence between commercial banks’ diversification andperformance by Linear Regression. In the context of China’s three major banks,diversification can improve the performance of listed commercial banks. At the lastpart of this paper, on the basis of the empirical analysis results, I have written someadvices to commercial bank diversification, and wish for learning and reference ofimproving listed banks operational diversification efficiency.