The Impact Of The Development Of Commercial Banks' Intermediary Business On Bank's Profitability

The further development of the interest rate marketization continues to shrink the net interest margins of the bank.Financial disintermediation and rapid declining in macroeconomic growth makes the scale of bank credit assets slowdown.These two factors directly caused China's banking industry net profit growth regarding assets liabilities business as the main body to fall sharply from 18.96% in 2012 to 4% within the last two years.Under this context,intermediary business creating non-interest income for the bank is increasingly important.Compared to the traditional asset liability business,intermediate business does not occupy the capital of banks,minimizing the risks.Besides,capital adequacy regulation has modest limitations on the development of intermediate business.In addition,part of the middle business has powerful development potential,high degree of innovation and higher profit margins.In order to improve bank's profitability,it is a more appropriate strategy to develop some intermediate business transformation.This paper first analyzes the characteristics of the intermediate business,development status and its influence on bank risk;Secondly,states the necessity of the development of intermediary business from the perspective of market oriented reform of interest rate,financial disintermediation and regulatory capital constraint;then combined with the scope of economic theory and synergy theory to analyze the impact of the development of intermediary business to bank profitability.Finally,based on these theories,combined with the six kinds of intermediary business characteristics,carry out a feasibility analysis about the development of these six types of intermediary business.This paper argues that the bank card business has high economic benefits,and financial advisory business has played an irreplaceable role;hosting business has great market potential;the degree of innovation of the payment business and agency business are low,while the competitions are fierce;The guarantee commitment business is risky and sluggish;with comprehensive analysis,the bank should focus on the development of intermediary business of the above three kinds.This is the empirical part of this paper.Through panel data regression analysis on the financial data of 17 Listed Banks from 2011 to 2015,this paper finds that there is a significantly positive correlation between proportion of intermediary business revenue and the bank's return on assets(ROA).It explains that the transformation development in intermediate business is conducive to improve bank's operating efficiency for assets in a new stage of banking industry development.Because of the difference among all kinds of intermediary business in the degree of innovation,development prospects,profitability and other aspects,this paper uses the major six intermediate business income as new explanatory variables and constructs a panel data regression model to decide the intermediary business most suitable for bank development.The regression results show that there is a significant positive correlation between bank card business and financial advisory business on the one hand and bank return rate in assets on the other.However,there is a negative correlation between the payment agency business and the settlement business on the one hand and asset returns on the other.The other two intermediate business don't have obvious impact on return rate in assets,so the bank should take priority on bank card business,financial advisory business and electronic banking to develop intermediary business.Finally,the paper puts forward four countermeasures to develop intermediary business,change the idea of the middle business development,adjusts the structure of intermediate business,strengthens its cooperation with non-bank financial institutions,develop electronic banking.