A Study on The Determinants of Profitability of Commercial Banks

Abstract

With the development of economic globalization, the financial mark et is gradually opening up, and the domestic banking industry is facing competition from foreign banks. Although Bank of China ranks well in terms of core capital, there is a big gap between people and the world 's advanced banks in terms of profitability. In addition, due to the adv ancement of information technology and the development of the Interne t, Internet finance has gradually integrated into our lives. People no lo nger only rely on traditional banking services. People choose. These h ave had an impact on Chinese commercial banks. Profitability is also a n important key for Chinese commercial banks to further enhance their core competitiveness. Profitability is also considered to be one of the three main operating principles of Chinese commercial banks. Factors to study the profitability of Chinese commercial banks, and then finding effective countermeasures to improve the profitability of commercial b anks is the key to the long-term and stable development of commercia l banks. Based on combing domestic and foreign literature on the factors a ffecting the profitability of listed commercial banks and the current situ ation of China's listed commercial banks, this paper puts forward relev ant research hypotheses, and selects the index data of 6 state-owned banks and 9 non-state-owned banks from 2012 to 2015 for analysis. B y constructing a panel data model, using descriptive analysis, OLS regr ession analysis, and fixed effect model, to study the impact of deposits, net increase in loans, and Internet finance on bank profitability. The fi nal conclusion is as follows: The empirical results show that the relati onship between deposits, loans and banks is not positive or negative. Through theoretical analysis, this paper believes that it is not simply t hat more deposits and more loans will result in better bank earnings. The relationship between them can be called "a double-edged sword". And empirical evidence proves that the development of Internet finance has a positive impact on the profitability of commercial banks, but the re are significant differences in the impact on different types of comm ercial banks. In general, state-owned commercial banks are ahead of n on-state-owned commercial banks. Therefore, from the perspective of deposits and loans, the structur e of assets and liabilities should be optimized to improve the profitabili ty of assets; from the perspective of cash and central bank deposits (s tatutory deposit reserves), banks should strengthen bank liquidity monit oring, formulate scientific strategies, and strengthen bank liquidity. Liqu idity management: From the perspective of total assets and total liabilit ies, banks can control the debt ratio while optimizing the asset structur e and increasing the asset turnover rate. Realize the maximization of a sset benefits From a macro perspective, banks should adapt to the eco nomic situation, increase investment in science and technology, improv e the development of Internet finance, identify their own positioning an d form more unique services, and learn from Internet finance to promo te the transformation and development of banks themselves. Key words: bank; profitability; influencing factors; panel data model