Welcome to Francis Academic Press

Academic Journal of Business & Management, 2022, 4(6); doi: 10.25236/AJBM.2022.040615.

Analysis on the factors influencing the profitability of city commercial banks


Xinchen Zha

Corresponding Author:
Xinchen Zha

East China University of Political Science and Law, Shanghai, China


With the slowdown of China's economic growth, the accelerated reform of interest rate marketization, the increasingly intensified trend of financial disintermediation, under the background of downward pressure on the economy, the business activities of urban commercial banks are facing a severe form. Compared with other domestic commercial banks, China's urban commercial banks have significant differences in profitability due to history, operation and management ability, local environment and other reasons. Therefore, it is a topic of strong theoretical and practical significance to explore which specific factors will affect the profitability of urban commercial banks and the extent of the impact. Factors influencing the city commercial bank profitability can be divided into internal and external, this paper assumes that the degree of assets, the credit ratio, capital strength, degree of non-interest income growth, operational efficiency and credit risk is the internal factors affect the profitability of the, while the external factors for economic development degree and the diversity of market demand. Based on the balance panel data of 10 urban commercial banks from 2013 to 2017, this paper conducts empirical analysis to verify the impact of various factors on the profitability of urban commercial banks. Based on the empirical research conclusions on the factors affecting the profitability of relevant sample city commercial banks, this paper puts forward strategies to improve the profitability of city commercial banks from five aspects: capital strength, cost management, credit risk, characteristic operation and regional economy.


City commercial bank; Profitability; Influencing factors; Panel data model

Cite This Paper

Xinchen Zha. Analysis on the factors influencing the profitability of city commercial banks. Academic Journal of Business & Management (2022) Vol. 4, Issue 6: 85-93. https://doi.org/10.25236/AJBM.2022.040615.


[1] Allen N. Berger, Christa H.S. Bouwman. How Does Capital Affect Bank Performance During Financial Crises? [J]. Journal of Financial Economics, 2013,109 (l): 146-1 76.

[2] Nicholas Apergis. The Long- term of Non-traditional Banking in Profitability and Risk Profiles of U.S. Banking Institutions: Evidence from a Panel of U.S. Banking Institutions [J]. Jounal of International Money and Finance, 20L4,45 (3): 61-73.

[3] Giovanni Ferri. Are New Tigers Supplanting Old Mammoths in China's Banking System? Evidence from a Sample of City Commercial Banks [J]. Journal of Banking andFinance, 2009 (33): l3l-140.

[4] Wilko Bolt, Leo de Haan, Marco Hoeberichts, Maarten R.C. Van Oordt, Job Swank. Bank profitability during recessi Journal of Banking and Finance, 2012, 36 (9): 2552 2564.

[5] Jiang YUE. Research on the influencing factors of profitability sustainability of Commercial banks in China [D]. Fudan University, 2013, 45-46

[6] Song Juanjuan, CAO Zhipeng. Research on profitability of commercial banks based on principal component Analysis [J]. Finance and Accounting Bulletin, 2014(3): 27-29.

[7] Li Minghui, Liu Lia, Sun Sha. Is it good for banks to develop non-interest businesses? Empirical analysis based on China's banking industry [J]. International Financial Studies, 2014(11): 11-22.

[8] Maj. Empirical research on the impact of capital structure on profitability of listed banks [J]. Finance and Accounting Monthly, 2013(2): 7-10.]

[9] Jiang Jian, Zhao Yang. Capital adequacy ratio, Ownership structure and profitability of commercial banks: An empirical study based on Chinese commercial banks [J]. Journal of Guizhou University of Finance and Economics, 2012(1): 33-38.

[10] Fu Yong, Qiu Zhaoxiang, Wang Xiuhua. Research on the Operating Performance of Small and medium-sized Banks in China and its Influencing Factors [J]. Journal of International Finance, 2011(12): 80-87.

[11] Zhao Xijun, Chen Lijie. Research on the Impact of Local economic growth on the Performance of Chinese city Commercial Banks [J]. Journal of Liaoning University (Philosophy and Social Science), 2012(3): 58-65.

[12] Xing Tiancai, Sun Jin, Yan Lili. The impact of business cycle strategy on the profitability of commercial banks [J]. International Financial Studies, 2013(3): 88-96.

[13] Zhang Xiaoyan. The Internal and external Factors affecting the profitability of Urban Commercial banks in China [J]. Wuhan Finance,2008 (6): 41-42

[14] Zhu Hongquan, Zhang Lingxue, Wang Na. Analysis of external factors influencing the performance of Domestic commercial banks [J]. Economic and Financial Management, 2014(10): 3-12.

[15] Hu Yu. Research on factors influencing profitability of Chinese Listed Commercial Banks [D]. Liaoning University, 2015, 31-32.

[16] He Guosheng, Liu Shu. Research on the listing of Chinese city Commercial banks -- Based on the perspective of Performance Analysis [J]. Journal of Guangzhou University (Philosophy and Social Science Edition), 2016(L): 99-108.

[17] Fan Xiaoqing, Bai Na. Empirical Analysis on profitability of State-owned Commercial banks in China [J]. Finance and Trade Economics, 2003.10: 43-49