Analysis And Comparison Of Influencing Factors Of Interest Spread In Commercial Banking System

With the development of internet banking and interest rate liberalization, the traditional profit margin of commercial banks were likely to slow down due to rising competition. The interest spread, as one of the most important part of China's commercial banks' profit, can measure the banks' operating efficiency. Overhead interest spread will increase our banks' dependence on traditional business and eventually impede bank transformation. Lower interest spread will make commercial banks operate difficultly and eventually affect capital market liquidity. Therefore, it is important to keep interest spread in an appropriate level.This paper sorts out domestic and foreign literature on the definition of interest spread, theoretical models and influencing factors, trying to establish the theoretical foundation of this paper. Therefore, this paper use the extended dealer model put forward by Maudos & Guevara and analyze the macro, internal and micro factors. After that, this paper chooselO factors of 36 China's banks from 2006 to 2014, and empirically analyze these data using individual fixed effect model. Finally, this paper regresses the data of large state-owned commercial banks, joint-stock banks and city commercial banks, and get the difference in spread influencing factors of different banks by comparing the result.The first chapter is introduction. This part introduce the research background, the significance of this research, the logic structure and the innovation of the research.The second chapter is the literature review. This part introduce the domestic and foreign research of interest spread's definition, theoretical models and influencing factors and give a simple review finally.The third chapter is the theoretical basis of this paper. Based on a review of previous studies, this paper chooses Maudos & Guevara (2004)'s model and analyze the macro, industry and micro factor that influencing the interest spread.The fourth chapter is the empirical analysis, which is also the core part of this paper. To begin with, this paper compare China's interest spread with other six major international regions, and find out that our banks'overall interest spread is in a moderate level, but the deposit and loan interest rate are quite low. Then, this paper regresses balanced panel data of 36 banks in China from 2006 to 2010, and find that there is a positive relationship between net interest margins and non-performing loan ratio, liquidity risk, market concentration, inflation rate, interest rate policy; and there is a negative relationship between interest spread and diversification, economic growth and operating efficiency; there is no relationship between net interest margins and risk aversion. Finally, this paper regress the data of large state-owned commercial banks, joint-stock banks and city commercial banks and get the result that there is some difference in interest influencing factors in different banks. The fifth chapter is the conclusion and the sixth chapter is policy recommendation.There are three innovations in this paper:Firstly, it study the moderate level of net interest margin by comparing China's spread with other six international regions' margin not with developed countries'. Secondly, it compare the spread factors of different types of banks in detail, especially adding city commercial banks. Finally, this paper use the lastly data in Bankscope from 2006-2014, which makes the result reliable.