The Impact Of Non-interest Business On The Profit Stability Of Commercial Banks

The research on non-interest business of commercial banks began in the 1980 s in the United States.The conclusions of the research on non-interest business in the early stage are often quite positive.Scholars mostly discuss non-interest from the perspectives of economies of scale and scope.The growth of business has brought commercial management performance and risk reduction to commercial banks.Then,as the proportion of non-interest business in the revenue of commercial banks has further increased,more and more scholars have observed the risk of non-interest business: Can non-interest business improve performance? Can diversified income reduce risk? Later,some scholars’ research results show that the diversification effect brought about by the non-interest business of big banks is obvious,and the volatility of business risks and revenues is significantly reduced.For small banks,non-interest business can even exacerbate volatility and lead to bankruptcy crisis.The development of non-interest business of China’s commercial banks started late,but it has developed rapidly.From the beginning of the 21 st century,non-interest-bearing business accounted for less than 10% of the commercial bank’s revenue ratio and increased to about 30% of 2017.However,China’s non-interest business still exposes some problems.The most important thing is that the non-interest business structure is single.The fee and commission income accounted for 80% of the non-interest income,which is not conducive to the dispersion of risks.For commercial banks,security is one of the most important business principles.Security is not only reflected in the absolute value of commercial banks’ income,but also in the volatility of earnings.Banks with stable earnings and low income fluctuations are more likely to be favored by investors and managers.Therefore,this paper starts with the non-interest business of commercial banks,uses the economies of scale effect,scope economic effect,and portfolio theory to qualitatively analyze the impact of non-interest business,and then divides 14 domestic listed banks according to whether the equity is directly held by the central government.For state-owned and joint-stock banks,and then based on their panel data,it is preferred to use comprehensive FGLS(feasible generalized least squares estimation)combined with LSDV(virtual least squares)to explore whether the non-interest business and its internal composition changes are increasing or decreasing.The profitability of China’s commercial banks.Finally,it is concluded that the proportion of non-interest business,the proportion of commissions and commissions,the proportion of net investment income,and the proportion of other businesses can reduce the profitability of commercial banks and improve the profitability of commercial banks.The sum of the ratio of profit and loss of fair value changes to the net income of exchange will increase the profit volatility of commercial banks and reduce the profitability stability of commercial banks,which is the same as the assumption in this paper.Based on the empirical conclusions of this paper,combined with the current status of the domestic financial market,the following policy recommendations are given: First,optimize the internal structure of non-interest business;Second,enhance the risk prevention and control capabilities of non-interest business;Third,develop financial new business with financial technology;Fourth,promote cooperation with universities and strengthen research,exploration and selection of strategic aspects of the company.