Proceedings of the 2024 International Conference on Applied Economics, Management Science and Social Development (AEMSS 2024)

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Empirical Analysis of the Influence of competition on the profitability of Commercial Banks

Authors
Liang Han1, *
1Boston University, 881 Commonwealth Avenue, 6th Floor, Boston, 02215, MA, USA
*Corresponding author. Email: lianghan@bu.edu
Corresponding Author
Liang Han
Available Online 27 May 2024.
DOI
10.2991/978-2-38476-257-6_64How to use a DOI?
Keywords
Profitability of Bank Operation; Competition; Commercial Bank
Abstract

China’s interest rate liberalization reform largely intensified competition. In order to maintain profitability, many banks starts to develop other businesses. However, there has been no research on whether competition is the primary factor that influences the profitability of commercial banks and whether this impact is universal. Therefore, we collected data on ROA, Asset-liability Ratio, Non-performing Loan Ratio, Interest Expense, Interbank deposit, and capital adequacy ratio of 585 listed banks, starting from 2011 to 2021 from WIND. The data used to conduct the research are winsorized to eliminate outliers at 5%. This paper constructed a fixed effects regression model. Also, this paper used GMM system dynamic for testing model endogeneity. To ensure model robustness, the model was tested by first changing the sampling period, and then repeating on interest income, and finally replacing deposit ratio with debt ratio. Finally, the following conclusions are drawn: (1) competition has a positive influence to the profitability of commercial banks. (2) the non-performing loan ratio has a greater influence regarding to the profitability of commercial banks. (3) the competition within in the region the bank is in has a greater influence regarding to the profitability of commercial banks.

Copyright
© 2024 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the 2024 International Conference on Applied Economics, Management Science and Social Development (AEMSS 2024)
Series
Advances in Economics, Business and Management Research
Publication Date
27 May 2024
ISBN
978-2-38476-257-6
ISSN
2352-5428
DOI
10.2991/978-2-38476-257-6_64How to use a DOI?
Copyright
© 2024 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Liang Han
PY  - 2024
DA  - 2024/05/27
TI  - Empirical Analysis of the Influence of competition on the profitability of Commercial Banks
BT  - Proceedings of the 2024 International Conference on Applied Economics, Management Science and Social Development (AEMSS 2024)
PB  - Atlantis Press
SP  - 534
EP  - 543
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-2-38476-257-6_64
DO  - 10.2991/978-2-38476-257-6_64
ID  - Han2024
ER  -