An Empirical Analysis on the Profitability of China's Commercial Banks

The profitability of commercial banks is the main indicator to measure their efficiency.In recent years,there is much literature in theoretical circle that studies the efficiency of Chinese commercial banks from the aspects of the economies of scale and cost benefit of commercial banks.But there is little literature to study the profitability of China's commercial banks.This article firstly contrasts and analyzes the financial indicators such as the profitability of 14 commercial banks from 1994 to 2003 and finds that the ROE and ROA of four state-owned commercial banks are clearly lower than those of ten stockholding commercial banks;Meanwhile,it undertakes regression analysis to the relationship between the profitability of commercial banks and the market structure and the nature of banks' property right by econometric method.The results indicate that positive correlation exists between the profitability of commercial banks and the market share of their deposit and the ratio between deposit and asset,and negative correlation exists between the profitability of commercial banks and the nature of banks' property right.Therefore,establishing and perfecting the corporate governances of Chinese commercial banks is the key to raising their profitability.