A Study On The Factors Of Non-interest Income Of Chinese Commercial Banks

In recent years, with the reform of market interest rate in China, and advance in information technology and development in financial innovation, the advantages of commercial banks’asset-liability activities are becoming fading. A large number of foreign banks and China city commercial banks are competing each other heavily in expanding customer resource. The banks which are relied on the deposit and loans meet the enormous challenges. So, in order to promote long-term development of commercial banks and improve the comprehensive strength of the bank, commercial banks need to develop new activities to increase profitability. Commercial banks’ non-interest income activities are increasingly becoming the focus in banking and academia field.This paper that based on a combination of research at home and abroad carries out some new conclusion by analysis about the present situation of Chinese commercial bank non-interest income activities. Non-interest income activities have already attracted the attention of banks. However, in general, the kinds of non-interest activities are still less and most of them are not high value. In the aspect of total income of non-interest, in recent years, the proportion of non-interest income in commercial bank total income is rising, but, compare with the western developed countries China has a great gap in non-interest income. That is to say, non-interest income has not become the main resource of bank profit. China banking sector has a great space to develop its non-interest income activities. In addition, the fees and commission income is the main resource of non-interest income, and mainly from bank card fees. Notably, in recent years, investment banking activities develop very fast and become an important source of non-interest income.Also, the paper select16commercial banks that have already listed in domestic currently. In order to analyst the problem more detail, the paper group the whole banks into two parts according to the nature of the bank, four state banks and other12commercial banks. And analysis the different effect between the two groups in those factors. I find that the proportion of no-interest income in total income for the big four is larger than those other12commercial banks. And, compare the two groups, the results of empirical suggest that the size of bank, Net interest margin and non-performing loan ratios have significant impact on no-interest income, and also the no-interest income has associate with activities and managements fees. And the paper also finds that loan-to-deposit ratios have not clear effects on non-interest income. Specifically speaking, the Net interest margin have a negative influence on non-interest income, and the size of bank, capital adequacy ratio, non-performing loan ratios and activities-and-managements fees are positively correlated with bank’s non-interest income.The framework of this paper is as follows:The first part is the introduction, and it mainly introduces the background and significance of research, and list the theoretical literature related to the bank’s no-interest income activities.The second part analysis the present situation of no-interest income activities in China’ commercial bank.The third part is variable selected and the description statistics.the paper collection the16commercial banks data during2007-2013that are already listed in China, and also I selected non-interest income related to business income as the dependent variable to measure the commercial banks non-interest income activities development results, while the paper also select bank scale, loan-deposit-ratio, capital adequacy ratio, and the number of bank employees to deposits, non-performing loan rate and national financial needs as explained variable.The fourth part is the result of the empirical analysis, the paper collection the16commercial banks data during2007-2013that are already listed in China, set up the Panel data regression, analysis the factors that affect the non-interest income activities of Chinese commercial banks. Empirical results show that the net interest margin have a negative influence on non-interest income, and the size of bank, capital adequacy ratio, non-performing loan ratios and activities-and-managements fees are positively correlated with bank’s non-interest income.The fifth part is the paper’s conclusions and recommendations.