A Study on the Impact of Non-Interest Income on Commercial Banks Performance

Abstract

With an upsurge of interest rate marketisation and internet finance, the role of commercial bank revenue in China's non-interest sector is turning more significant in terms of the bank's operating performance. From 2017 through 2021, the study explores the relationship between non-interest revenue and operating performance in business banks. Simultaneously, the article explores the various degrees of influence of three forms of non-interest revenue on operating performance and compares non-interest income variances on operating performance amongst banks with different equity natures. The empirical data show that non-interest income from commercial banks beneficially effects on their profitability; the proportion of fees and commissions contributes more to the profitability; and the impact on operating performance is more pronounced for state-controlled and joint-stock banks than for urban and agribusiness banks. As a consequence, commercial banks should pursue other businesses aggressively in order to diversify non-interest income sources and play a role in bank operations.