An Empirical Study On The Mechanism Of Commercial Bank Performance Promotion

As the financial intermediary, commercial banks play an important role in entire national economy, the level of its performance not only affects the health of the banking sector itself, but also related to the orderly development of the whole economy and the improvements of its efficiency. In most developing countries, the government regularly put some restrictions on commercial banks’ conduct, under the mismatch of resources system, the performance of commercial banks tend to be low. Along with the deepening world economic integration, the competition between countries become increasingly fierce. In view of the special status of the banking sector in the national economy, the critical significance of bank performance to its economy stability is highlighting.Therefore, it is urgently to study the internal and external factors which influent bank performance, explore the influencing factors of conduction mechanisms, then build a framework for the sound operation of the banking system. China, as the world’s largest developing country, its commercial banks’ situation is similar to the case with most developing countries. China has been advancing the reform of commercial banks since joining the WTO in2001and reaped great benefits, however, we should also see that China’s commercial banks still exist problem, such as low capital adequacy rate, concentrated banking market, weak risk tolerance and so on. Especially after2006when the banking sector to fulfill WTO accession commitments, in face of fierce competition from high efficiency foreign banks, how to ensure the competitiveness of Chinese commercial banks, how to guarantee the healthy development of China’s banking sector is an imminent topic. So, it is meaningful to discuss how the factors affecting bank performance, seek common rules between China and other developing countries in bank performance factors, and then draft relevant policies targeted to enhance the bank performance.Citing complex domestic and international economic conditions, the paper test commercial banks in62developing countries, then, combine with China’s reality, the paper make some advice on how to improve bank performance.Firstly, on the basis of domestic and foreign literature on bank performance, the paper construct the commercial bank index evaluation system using CAMEL rating method, in which we use BSS model quantify management quality indicators, this method makes our analysis of Microscopic factors more comprehensive and accurate.Then, on the basis of the micro factors have been built, the paper combine macroeconomic factors with market structure factors, construct a three dimensions framework. After that we provide a insight into each factor on the bank performance of the transmission mechanism.Secondly, according to the framework established, we use factor analysis refining common factors, then build a second-order factor structure equation model, finally, this paper bring up the conclusion based on the analysis of empirical results.Finally, according to the conclusions of the study combined with the actual situation in China, this paper put forward some suggestions and countermeasures to promote China’s bank performance improvement from macroeconomic factors, structural factors market and microscopic factors.