The Study On Measure Of Commercial Banks’ Comprehensive Performance And Its Influencing Factors In China

Commercial banks are important financing intermediate, they are playing acrucial role in the process of social resource allocation. The performance ofcommercial banks in China has become a critical problem of China’s financialindustry. Since2003, China’s state-owned commercial banks implemented thejoint-stock reform one by one. Corporate management and business objectives arequite different from before, they are now focusing on the improvement ofperformance. June8,2012, the People’s Bank of China issued a floating interest ratepolicy, this explain China also opened a prelude to the market-oriented interest rate,the interest rate market is bound to further exacerbate the competition amongcommercial banks. So how to measure the comprehensive performance of thecommercial banks, what are the influencing factors of commercial banks, if theoperating performance of the commercial banks can improve and how to improvethese issues are not only questions of academics, but also concerns of commercialbanks’ operators.The main part of this article first defines the meaning of the commercial banks’performance, classify commercial bank performance evaluation methods into singlefactor indicator approach and the comprehensive indicator, which focus on theprinciple and practice of Factor Analysis. I classified influencing factors intomacroeconomic factors, industry factors and microeconomic factors.Then, selected8factors: equity net profit margin, asset margin, earnings per share,asset-liability ratio, total asset turnover, net asset growth rate, the growth rate of totalassets, and using2005-2011data of14listed banks to conduct factor analysis tocalculate the score of the14commercial banks. I compare the scores with Tobin’s q totest the alternative of the scores to banks’ performance. Take the scores of the14listed commercial banks as dependent variable. Considering the availability of dataand the summary of factors at home and abroad, choose6factors as independentvariables to construct model. On the macroeconomic level, I selected the logarithm ofGDP (LGDP). On the industry level, I selected market concentration indicators (CR4).On the microeconomic level, I select assets accounted (ZCB), NPL ratio (BLDK),loans to deposits ratio (DCB), and intermediate business income share (CXB). Thesample of this paper is7indicators of14listed commercial banks’2005-2011data.The sample data is wide and short, so the empirical analysis using a panel data model. The study showed that assets accounted failed to pass the test significance, andexcluded this factor to conduct again, the results show four other explanatoryvariables through the test are of significance, and the overall fit is better.Finally, this paper proposed five policy recommendations of how to improve theperformance of commercial banks on the basis of the empirical conclusions.