EMPIRICAL ANALYSIS OF FACTORS AFFECTING THE PROFITABILITYIN CHINA BANKING INDUSTRY

Abstract

The purpose of this study is to analyze the factors influencing the profitability of Chinesecommercial Banks. Due to economic globalization and the rise of electronic finance, most people choose the emerging electronic financial services rather than the traditional commercial banking services, which directly affect the profitability of commercial Banks, so this study has important practical significance. This study takes the financial dataof tencommercial Banks in China as the independent variable and uses the CAMELRatingforanalysis, such as capital adequacy ratio, asset quality (Non-Performing Loanratio), management quality (Cost Income rate) and liquidity (Deposit/loan ratio). Then, theNet interest margin of the bank is used as the dependent variable to represent the profitabilityof the bank. The research method was quantitative. The results show that there is a positiveinfluence between the Capital Adequacy ratio and the Non-Performing Loan ratioontheNet Interest margin, and there is a negative influence between the Cost Income ratioandthe Deposit/loan ratio on Net Interest margin. This study confirms that the capital adequacyratio, asset quality, management quality and liquidity of Banks play a key role intheprofitability of commercial Banks. In addition, the author also gives some Suggestionstoimprove the profitability of commercial Banks, which is of great significance to thefuturedevelopment of commercial Banks.