The Impact Of Non-interest Income On The Profitability Of China's Commercial Banks

In the ever-changing financial market environment,the traditional profit model of China's commercial banks with deposit and loan spread income as the main source of profit is challenged,and is transforming into non-interest income,looking for new profit growth points.This paper defines the concept of non-interest income,explores the motivation of non-interest income development from economic theory,analyzes the mechanism of non-interest income impact on profitability and proposes a research hypothesis.Based on the data of 28 listed commercial banks in China from 2008 to2017,this paper analyzes the development status of non-interest income of different types of commercial banks in China from the aspects of absolute quantity,relative quantity and internal structure of non-interest income,and summarize the law of development.This paper studies the impact of non-interest income on the profitability of commercial banks in China through empirical analysis and classification from two aspects: the proportion of non-interest income and the diversification of non-interest income,and draws the following conclusions:simply increasing the proportion of non-interest income does not steadily increase the profitability of commercial banks,but increasing the diversification of non-interest income is conducive to significantly improving the profitability of commercial banks.Increasing the proportion of net fee and commission income is conducive to improving the profitability of state-owned commercial banks and joint-stock commercial banks.Increasing the proportion of foreign exchange earnings is conducive to improving the profitability of state-owned commercial banks and increasing the proportion of other business income to state-owned commercial banks and joint-stock commercial banks.And the profitability of city commercial banks are favorable,but increasing the proportion of investment income will reduce the profitability of state-owned and joint-stock commercial banks.Finally,this paper proposes countermeasures for different types of commercial banks to improve the profitability of commercial banks in terms of optimizing non-interest income structure,providing differentiated services for active innovation,increasing investment in science and technology and talents,and controlling risks.