Research On The Impact Of Diversification On The Performance And Risk Of Commercial Banks In China

With the rapid development of the technology era,the traditional business model mainly based on spread income has been unsustainable.Commercial banks have paid more and more attention to the development of non-interest business,and hope to realize the transformation and upgrading of banks through the development of diversified business..Under this background,the non-interest business of China's commercial banks is developing rapidly,and non-interest income continues to increase in the proportion of banks' operating income.It is self-evident to explore the impact of diversified operations on the performance and risks of commercial banks.Influenced by economies of scale and scope,for different types of commercial banks,the impact of non-interest business development on operating performance and risk may be inconsistent,that is,the impact of diversification on performance and risk is non-linear.This article is based on Hansen Threshold regression model,using the bank asset size as the threshold,to study the impact of diversified operations on the performance and risks of commercial banks.The article first sorts out and summarizes the research literature of domestic and foreign scholars on diversified management;then,it introduces the development overview of the diversified management of commercial banks in China,explains the connotation definition and related theoretical basis of the diversified management of banking business;and then introduces the threshold Regression model,empirical research on the relationship between business diversification and commercial bank operating performance,risk,non-interest income components and risk.The empirical results show that for banks with different asset sizes,the impact of diversified business development on bank performance and risk is different.The diversified business development of small banks does not have a significant positive effect on the improvement of bank profitability,and will increase banks ' Bankruptcy risk;business diversification of medium-sized banks can significantly improve bank performance,but the ability to reduce risk is not significant;after the asset size is further increased,large banks are more effective in improving performance through diversification,and can use investment portfolios to spread risk.Regarding bank diversification,this article gives three suggestions.First,banks shoulddecide on the specific conditions of diversified operations based on their size and risk tolerance.Second,pay attention to the coordination with traditional business when carrying out business innovation.Third,the supervisory layer should pay attention to off-balance sheet business,refine the management rules of off-balance sheet business,and prevent problems arising from insufficient monitoring of off-balance sheet business.