The Impact Of Negative Interest Rate On Profitability Of China's Listed Commercial Banks

Negative interest rate refers to negative real interest rates.In other words,although the bank deposit rate is positive,the inflation rate is higher than bank deposit rates with the rapid rising price index(CPI),eventually leading to the negative real deposit rates.There have been six period of negative interest rate in China's history since 1990.The time period of negative interest rate has accounted for 42.67%and negative interest rate has become the normal state of our economy.As the price of money,the interest rate will inevitably have a great influence on stability and security of financial market when it is changed,and then affecting the whole national economic system.For the entire financial market,China's listed commercial banks are an important part of it.It is very significant to maintain and enhance the level of China's listed commercial banks' profitability in the era of negative interest rate.Thus,studying the effect of negative interest rates on the profitability of listed commercial banks in China is a subject with great significance both theoretically and practically.This paper summarized the process of negative interest rate,analyzed the mechanism of negative interest rate on the profitability of listed commercial banks in China,and generalized its current influence on the profitability of China's listed commercial banks.Taking China's listed commercial banks as the analysis objects,this paper selected quarterly data from the second quarter of 2007 to the first quarter of 2018,using panel data regression analysis method for empirical research.The paper also analyzed the effects on different kinds of listed commercial banks.The results showed that negative interest rate has positive influence on the profitability of listed commercial banks in China,supporting the reality of the bank's good state during the period of negative interest rate.In addition,bank profitability is proportional to net profit margin,non-interest income ratio,non-bank social financing ratio,capital adequacy ratio;and is inversely proportional to GDP growth rate,bank assets scale,cost income ratio,non-performing loan ratio,which basically conforms to the theoretical expectation.Finally,based on the empirical results and theoretical analysis,the paper put forward three policy suggestions to improve the overall profitability of listed commercial banks:ameliorating the profitability of bank deposit and loan business;improving the innovation ability of intermediate business and establishing effective risk control mechanism,in the hope of realizing the sustainable development of listed commercial banks.At the same time,the paper also came up with different policy recommendations according to the empirical results,in order to help different types of listed commercial banks to plan their own development paths.