Factors Influencing Commercial Bank Performance: A Case Study on Commercial Banks in China

• Main Author: Ji, Rui
• Format: Thesis
• Language: English; English
• Published: 2012
• Subjects: HG Finance
• Online Access: https://etd.uum.edu.my/3220/1/JI_RUI.pdf; https://etd.uum.edu.my/3220/3/JI_RUI.pdf; https://etd.uum.edu.my/3220/

A steady bank system is important cornerstones which can help modern economies maintain stability and healthy development. In order to achieve this goal, China's banking industry has experienced a long-term reformed process. The purpose of this study is to research some vital factors which influence performance of the commercial banks industry in China. This study takes 4 state-owned and 2 joint-stock commercial banks of China as the research sample, by analyzing the impact of the economic variables and bank specific variables on bank performance. The variables are real growth rate, inflation rate, exchange rate, global finance crisis (for economic variables) and bank’s risk management-loan to deposit and equity ratio, bank’s size, property sector, net interest margin factors, interest income ratio and deposit-assets ratio (for bank specific variables). The bank performance is measured by ROE. The findings show that all variables contribute 85.8% to the commercial bank performance in China. Seven factors namely exchange rate, bank’s risk management- equity ratio, bank’s size, net interest margin factors, interest income ratio and deposit-assets ratio are significant determinants of bank performance in China.