The Empirical Study Of Commercial Banks' Intermediary Business On Their Operation Performance In China

Recently,China's economy faces the pressure of descending macroeconomy growth,the process of interest rate marketisation and financial disintermediation.As a result,the commercial banks in China have been adjusting their business models and actively developing their intermediary business sector.This trend results in the continuous increase of revenue of these banks from intermediary business.Therefore,the study of the effect of commercial banks' intermediary business and their operation performance is becoming a hot topic.This paper focuses on the study of intermediary business' progress of the commercial banks in China,by selecting the operation results of 19 listed commercial banks and macroeconomic data,from 2008 to 2016.The study analyzed the effects of revenue from intermediary business on these banks' operation results using the fixed effects model and the random effects model.The samples are then divided into three groups,namely conglomerates,joint-stock commercial banks and city commercial banks to compare the results among groups.The commercial banks in China still rely on its traditional business,that is,the margin between their interest paid for savings and interest received for loans,as the main revenue stream.The study then progresses to analyzing how revenue from intermediary business affect banks' operation performances,and to providing suggestions on imposing viable policies to improve intermediary business of banks.The empirical study shows that the revenue of intermediary business has a negative effect on banks' operation performances and there is a significant substitution effect between the revenue of intermediary business and that of the net interest margin.Conglomerates' intermediary business has a positive and statically significant effect on their operation performances.Its revenue of intermediary business has a positive effect on the net interest margin.For joint-stock commercial banks and city commercial banks,the operation results are negatively affected by intermediary business and the statics are statically significant,showing an obvious substitution effect between their intermediary business and net interest margin.