Research On Influence Of Diversification Strategy On Performance Of China's Commercial Banks

This paper studies the impact of bank diversification on bank performance from the perspective of income structure and loan structure.Using fixed effect model and random effect model,42 listed commercial banks from 2007 to 2017 are divided into 15 national commercial banks and 27 regional commercial banks.The empirical results show that,there is a U-shaped relationship between diversified operations and overall bank's performance.However,there is an inverted U-shaped relationship between diversified operations and the performance of national commercial banks,which is contrary to the whole.The conclusions of regional banks are the same as the whole.Then,based on the theory of diversified motivation,the reasons for the above empirical results are analyzed,and the following policy recommendations are proposed for the current situation of China's banking industry.National commercial banks should control the scale of non-interest income and carefully select the credit industry;regional commercial banks should base on traditional businesses,centralize credit structure,and strengthen cooperation with the government.In response to the decline in performance caused by the diversification strategy,banks should promote technological,financial innovation and open up multiple sales channels.Due to the decline in performance caused by information,technology,human resource asymmetry and market competition mechanism,the overall banking industry should establish a corresponding credit risk investigation system,penetrate the use of verification funds,standardize external competition behaviors,and improve internal business management capabilities.