Research On The Impact Of Income Structure On Profitability Of Commmercial Banks In Inner Mongolia W City

As for banks of Inner Mongolia W city,deposit and loan business is the main source of income all the time,so they are very dependent on the spreads.But,with the completing of interest marketization,accelerating of financial disintermediation,and the strengthening of capital constraints,banks are facing the challenging of increasing competition and spread narrowing.In this context,expending non-interest income and transforming the income structure become the consensus of commercial banks.However,the study of income structure transition has not yet reached a conclusive conclusion.So,In order to explore the way to transform the income structure of banks in W city,We use the local commercial banks as a sample to study the impact of their income structure on profitability.On the basis of reviewing the predecessors’ research and guided by the theory of financial innovation,the theory of scope economy,the theory of transaction cost,the theory of diversification and the theory of portfolio,this paper theoretically analyzes the impact of the income structure and its components on profitability,and it is concluded that the traditional income structure is seriously imbalanced and the non-interest income urgently needs to be improved.Then,In order to further verify the above results,This paper uses the financial data of 17 commercial banks in Inner Mongolia W city to establish the panel-data model,and study the problem by empirical analysis.Empirical results show that net interest income,fee income and investment income are positively correlated with profitability,the cost-income ratio and devaluation lost of assets are negatively related to the bank’s profitability.Through the study of this paper,we found that net interest income is still the main source of income for banks in Inner Mongolia W City,but at present this part of income growth is weak,in order to achieve sustained profitability growth,we must vigorously develop non-interest income business;moreover,in addition to the income structure,commercial banks operating costs and asset impairment losses will also have a significant negative impact on profitability.