The Effect Of Non-interest Income On Revenue And Risk Of Commercial Banks

Recent years, since the pace of interest rate marketization is accelerating, the financial disintermediation is highlighting, the profit of the traditional deposit and loan business is squeezed for commercial banks. In the background of increasingly severe competition, banks begin to involve in non interest business, and transform to diversified strategy to meet the challenge. This paper focuses on how non interest business affects the performance and risk of commercial banks. Through empirical analysis, to provide meaningful suggestions according to the research results.This paper briefly reviews the domestic and foreign literatures on non-interest income, then summarizes the development status on non interest business. In the part of empirical research, this paper firstly reviews the mechanism of non-interest income theory, and then select three groups of sample (large-scale commercial banks, joint-stock commercial banks and city commercial banks), and use panel data from2005to2013to build a multiple regression model.This paper selects ROA as a measure of bank performance, the ROA coefficient of variation and standard deviation to measures bank risk, and chooses the non-interest income ratio and Herfindahl index to research.The empirical results show that, for the state-owned banks and joint-stock banks, the more centralized are the non-interest business and the higher the ratio of non-interest income, the higher the ROA and the lower the risk. For city commercial banks, the more centralized are the non-interest business and the higher the ratio of non-interest income, the lower the ROA and the higher the risk. According to the empirical results, this paper put forward several proposals for commercial banks to engage in non interest business...