Analyzes The Factors Affecting The Profitability Of Small And Medium-sized City Commercial Banks

As China’s economic erowth rate slows down,the financial industry is affected by its influence as a pillar industry of the national economy,and development has begun to slow down.Under this situation,with the accelerated reform of interest rate marketization.the profitability of commercial banks faces greater challenaes.In addition,commercial banks are also facing competitive pressures with Internet finance companies,such as Alibaba,Tencent,Jingdong and other Internet giants.Small and medium-sized city commercial banks face greater challenges and pressures than the large eommercial banks in the current market environment due to their relatively small scale,strong development dependence and relatively narrow customer base.To this end,how to make small and medium-sized city commercial banks sustainable in the fierce market competition has become an important issue that people from all walks of life must solve.Based on this,this paper makes an in-depth and detailed analysis of the factors affecting the profitability of small and medium-sized city commercial banks,and proposes countermeasures to improve the profitability of small and medium-sized city commercial banks to ensure their sustainable development.This paper empirically analyzes the factors affecting the profitability of small and medium-sized city commercial banks from both internal and external aspects.Assume that internal factors are core tier 1 capital,current ratio,non-performing loan ratio,cost-to-income ratio,commission and fee income,and capital adequacy ratio.The external influence factors are the GDP index of the city where the city is located and the growth rate of fixed asset investment.In order to verify the extent of the impact of various factors on the profitability of city commercial banks,this paper empirically analyzes the factors affecting the profitability of urban commercial banks based on the balance panel data of 35 non-listed city commercial banks from 2014 to 2016.The empirical results show that except for the cost-to-income ratio and the GDP index of the city,the impact on the profitability of urban commercial banks is not significant,and the rest are significant factors.Among them,the negative impact factors are non-performing loan ratio and current ratio.According to the results of empirical analysis,this paper selects Shaoxing Bank as an example for case analysis.Combining the results of empirical analysis and case analysis,it is proposed to improve the profitability of small and medium-sized city commercial banks from the following six aspects:improve capital strength and reduce operational risks,maintain reasonable liquidity,improve asset quality,strengthen risk management,and diversify business structure.Develop,increase financial innovation,actively respond to macroeconomic changes and strive to create a good external environment.All in all,in order to make the research conclusions objective,feasible and practical,this paper not only uses the conventional empirical analysis method,but also combines typical cases to conduct research.The conclusion of tbe study can provide a reference and reference for how small and medium-sized city commercial banks can solve the difficulties encountered in development and improve their profitability,and occupy a place in the fierce market competition.At the same time,this study fills the gap in the theoretical research on the factors affecting the profitability of commercial banks in small and medium-sized cities.