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Non-Interest Income, Profit, and Risk Efficiencies: Evidence from Chinese Commercial Banks

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DOI: 10.23977/ferm.2022.050506 | Downloads: 37 | Views: 689

Author(s)

Xuan Yao 1, Tiancheng Han 2, Yuxuan Xie 2, Qingyuan Liu 3, He Zhao 4

Affiliation(s)

1 School of Economics and Management, Southeast University, Nanjing, Jiangsu 21189, China
2 Reading Academy, Nanjing University of Information Science & Technology, Nanjing, Jiangsu 210044, China
3 Business School, Nanjing University of Information Science & Technology, Nanjing, Jiangsu 210044, China
4 Changwang School of Honors, Nanjing University of Information Science & Technology, Nanjing, Jiangsu 210044, China

Corresponding Author

Xuan Yao

ABSTRACT

According to the traditional definition, banks are institutions to accept deposits and make loans. However, non-interest income, including commission, fees, and trading, is increasingly being considered a crucial part of the bank operation. Previous literature argues that the increase in non-interest income leads to an increase in profit and lowers the overall risk. However, this paper found that this is not necessarily the case, and the result depends on whether banks are listed or not. We test these hypotheses by analyzing the data from commercial banks in China over a ten-year period. Advice for improving the structure of the non-interest income is provided to policymakers.

KEYWORDS

Non-interest income, Commercial banks, Panel data, Multifactor regressions

CITE THIS PAPER

Xuan Yao, Tiancheng Han, Yuxuan Xie, Qingyuan Liu, He Zhao, Non-Interest Income, Profit, and Risk Efficiencies: Evidence from Chinese Commercial Banks. Financial Engineering and Risk Management (2022) Vol. 5: 36-46. DOI: http://dx.doi.org/10.23977/ferm.2022.050506.

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