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Scientific Programming
Volume 2017, Article ID 4803840, 8 pages
https://doi.org/10.1155/2017/4803840
Research Article

Noninterest Income and Performance of Commercial Banking in China

1School of Economics and Management, Harbin Engineering University, Heilongjiang, China
2Data 61, CSIRO, Melbourne, VIC, Australia

Correspondence should be addressed to Limei Sun; moc.361@1540mls

Received 27 September 2016; Revised 3 November 2016; Accepted 21 November 2016; Published 15 February 2017

Academic Editor: Xiaofeng Xu

Copyright © 2017 Limei Sun et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

Noninterest income is what most Chinese banks are striving for in recent years because of the vigorous competition among commercial banks due to the increasingly open market and tough regulation from the central bank of China. But the problem is the real effect of noninterest income on profit and risks. A panel threshold model is used with balanced panel dataset of 16 listed Chinese commercial banks, for the period of 2007 to 2013, to investigate the relationship between noninterest income and performance. The findings show two main conclusions: () the existence of two thresholds shows that there is nonlinear relationship; () there is a general negative correlation between the noninterest income ratio and performance of commercial banks. Furthermore, when the noninterest income ratio is higher than the two thresholds, the negative correlation decreases. Implications of the paper are that the ratio should be controlled in a range or noninterest income will not positively affect the performance, and a high level of performance can be gained only by raising the ratio to a certain level.