The Empirical Research Of The Financial Development’s Influe-nce On The Performance Of Commercial Bank In China

People begin to ponder over the relationship between financial development and management performance because of a global financial crisis caused by US’s subprime mortgage crisis. Therefore, looking into the influence had by financial development on management performance of commercial bank may make people to think over the emergency capability of commercial bank in international financial crisis and make the bank a better management performance fundamentally. In the researches before, the methods people using to study management performance evaluation are mainly parametric method and nonparametric method, such as SFA, TFA. DEA, etc. However, these methods are mainly used to study the index of the bank interior system other than the business environment influence on management performance of the bank. This thesis tries to study on this topic both in theory and experience. As for theory, it analyses the way how China’s financial development influences management performance of commercial bank. Whereafter, under the frame of Bresnahan. it illustrates how financial development influences the management performance of commercial bank through building a new input-output production function. In the last part of this thesis, it carries on an empirical study on the relationship between financial development and management performance of banks. Firstly, through descriptive statistical analysis, it studies, in the aspect of volume and structure, the relationship between the variable quantity of financial development (M2, stock capitalization, premium income, bank credit) and the variable quantity of management performance(property situation, liability situation, rate of non-performing loans) of all kinds of commercial banks. Based on these studies, the thesis demonstrates the relationship between financial development and management performance of commercial banks by using the data of20commercial banks in China from2005to2011.The theoretical analysis shows that in order to promote the improvement of the commercial banks operating performance in the current and long-term, financial development must maintain a reasonable structure, because of financial markets are necessary macroeconomic conditions for business development of China’s commercial banks. The empirical results show that in the2005-2011years, there’s a balanced positive relation between the financial development and commercial bank performance and different financial development variables have different affect to the commercial bank performance. Firstly, financial development variables of the broad measure of money supply (M2). the stock market value growth rate, insurance expense’s growth rate promote the improvement of the commercial banks return on assets (ROA), inhibit the liquidity ratio of commercial banks (LD) and non-performing loan ratio (NPL). The broad measure of money supply (M2) growth rate, the stock market, as well as the insurance expense’s growth rates have a positive role in promoting the improvement of performance of commercial banks. However, the bank credit play an inhibitory effect on the improvement of performance of commercial banks because of bank credit (investment in fixed assets) have a negative effect on commercial bank return on assets, promote the formation of liquidity ratio (loan-to-deposit ratio) and non-performing loan rate. Firstly, we should speed up the reform of China’s commercial banking operation of market-oriented, reduce the excessive intervention of the government in the allocation of financial resources, especially for the investment in fixed assets. Making the market play a more important role in the allocation of financial resources, thus leading the funds flow smoothly into the high-growth, high-tech and high value-added sectors of the economy can promote the sustainable growth of economy. With which the commercial bank savings and credit operations will increase, the non-performing loan ratio will decline, and the banks operating performance will improve. Secondly, the Chinese monetary authorities should gradually push forward the market-oriented interest rate reform, improve the actual savings interest rates, prevent the commercial banks actual savings rate from being negative, encourage household savings and promote the financial institutions to effectively transform the saving capital into high-efficiency investments thus increasing the capital formation rate. Thirdly, the government needs to pay more attention to support and develop the small and medium-sized commercial banks and strengthen the competition between the banking industries. In addition, the government should promote the transform of financial structure from concentrated on the large state-owned banks to concentrate on the medium-sized commercial banks, which focus on serving the middle-sized and small enterprises; provide fair competition mechanism for the development of small and medium-sized commercial banks; cancel the unfair treatments; gradually establish and improve small and medium-sized commercial bank market entry and exit mechanisms; and provide differentiated policy supporting measures if necessary. Fourthly, we should strengthen financial innovation and improve the performance of commercial banks.