Study On The Impact Of Diversification On Profitability Of Urban Commercial Banks In China

In recent years,along with the deepening reform of financial system and push forward and perfect financial liberalization,in many times in a wave of financial market reform,urban commercial Banks in China have ridden,beckoning,between financial institutions in the increasingly competitive environment,especially to rapid development,to promote local economic development,for the development of local small and medium-sized enterprises to provide strong financial support,etc.,play an increasingly important positive role.In the early Chinese city commercial Banks to establish the business structure is single,with the improvement of the social and economic development of the financial system and city commercial Banks in China's own development,single business structure has been unable to meet its own needs and the development of local economic development of the development of city commercial Banks of our country also produced a new business.Therefore,the study on the impact of diversification on the profitability of urban commercial Banks has gradually become an important research topic.Therefore,after sorting out previous studies on diversification of commercial Banks by domestic and foreign scholars.Organize an overview of diversified urban commercial Banks in China,then China's city commercial Banks in theoretical diversification effect on its profitability analysis,portfolio theory,synergy theory,the internal market theory,principal-agent theory and the theory of cross subsidy based on the theory of four from the resource sharing mechanism,risk smoothing mechanism,market competition mechanism and the synthetical effects of the different influence mechanism aspects discuss the diversification effect on profitability.Then,relevant panel data of 24 urban commercial Banks in China from 2008 to 2017 are collected to empirically analyze their specific impact on the profitability of China's urban commercial Banks from the perspectives of the degree of diversification and the income structure of the Banks in the diversification.The empirical results show that there is a significant positive correlation between diversification degree index and profitability index in China,while the proportion of investment income is negatively correlated with profitability,and the proportion of fair value change profit and loss and other income is positively correlated with profitability.The higher the degree of diversification of China's urban commercial Banks is,the higher their profitability will be.Therefore,urban commercial Banks should actively carry out diversified operations.But through the study of the empirical analysis of income structure of the bank found that not all of the business to our country city commercial bank profitability has promoting effect,investment gains and losses will reduce the profitability of the bank's business to a certain extent,so different city commercial Banks should,according to the needs of local economic development and their own actual situation to carry out the relevant business.At last,according to the discussion of this paper,some specific Suggestions are put forward.