THE INFLUENCE OF INTERNAL FACTORS AND EXTERNAL FACTOR ON BANK PROFITABILITY IN CHINA

Abstract

Profitability is the basis for the survival and development of commercial banks. It is of positive significance to improve the profitability of banks and promote the healthy and stable development of the banking industry. The purpose of this study is to analyze the impact of internal and external factors on the profitability of commercial banks in China. The researcher used quantitative methods and auxiliary data for the research. In this study, the net interest value is taken as the index to measure the profitability of banks. Five independent variables (bank size, capital adequacy ratio, non-performing loan ratio, GDP growth rate, inflation rate) and one dependent variable (NIM) were selected. The analysis is based on the relevant data of nine representative commercial banks in China from 2013 to 2019, with a total of 63 observations obtained. In this study, multiple regression and hypothesis were adopted to analyze the influence of independent variables on dependent variable by EViews. Through the research, it is concluded that bank size, non-performing loan ratio and inflation rate have no significant impact on bank profitability, while capital adequacy ratio and GDP growth rate have a significant positive impact on bank profitability