The Empirical Analysis Between Financial Performance And Diversified Income

With the economy in a downward normal, Non-performing loan ratio and balance of China's commercial banks tend to rise, which leads the gradual deterioration of its asset quality. At the same time the basic shape of the interest rate liberalization and the internet finance gradually engulfed the profits of commercial banks. Commercial banks in China in urgent need of changing profit model, developing the diversified income, and improving financial performance. Based on this background, this paper do the empirical research on all types of commercial banks(covering large state-owned, joint-stock, urban, rural commercial banks) in aim to find how the diversified revenue affecting on the financial performance.This paper introduces the research background and purposes, then describes the theoretical and practical value of the research. Review correlations theory between diversified income and financial performance in the literature. This paper point out diversified income may have different effects on the financial performance in different commercial banks.This paper define the concept of diversified income and financial performance, and introduce economic theory that related to diversified income, list the single and comprehensive financial evaluation indicators that related to financial performance, describes correlation theory between diversified income and financial performance, which provide solid theoretical foundation for next empirical research.This paper introduces the whole operating situation of commercial bank in China, and analyze current situation of diversified income and financial performance in China, point out their problems.Based on financial data of forty-eight commercial banks in China, this paper do empirical research on China's commercial banks. And build the financial performance evaluation indicator, then use factor analysis to get the comprehensive financial performance indicators of commercial banks and put it as the dependent variable. Meanwhile, select representative six diversified incomes in the commercial banks as independent variables, then establish a multiple regression model in aims to learn correlations between diversified income and financial performance. The results show that commercial bank's interest income is positively correlated with its financial performance and its impact on financial performance is greater than the non-interest income, then fees and commissions income was positively correlated with financial performance and its impact on financial performance is greater than other non-interest income, other non-interest income have different effects on different banks in financial performanceEmpirical results were explained, from a macro point of view this paper put forward giving proper financial regulation model; strengthening supervision on the business and construction of law; coordinating the formation of financial holding company. From the micro point of view this paper put forward different commercial banks having different diversified development; focusing on diversification of interest income; increasing the proportion of non-interest income; optimizing the structure of non-interest income; preventing the volatility of other non-interest income; upgrading developmental speed of IT and talent; improving the diversification of financial performance evaluation.