Effect of the Structure of the Balance Sheet on the Performance of the Commercial Banks Taking Listed Commercial Banks in China as Examples

Abstract

Commercial banks play an important role in China's national financial system. However, in recent years, with the fast development of internet finance and diversification of financing method, traditional commercial banks have been confronted with many sources of shock. In this context, commercial banks are struggling making profit to survive. However, in the way they adjust, some are successful and some are not. At the same time, how to adjust the structure of its balance sheet is very important for the development of commercial banks. This research focuses on the relationship between the structure of the balance sheet and the performance of the commercial banks, using empirical analysis method. And the data comes from the annual reports of 42 listed commercial banks from 2011 to 2020.At last, the result shows that loan-deposit ratio is in negative correlation with the performance, inter-bank borrowing to inter-bank lending ratio is in positive correlation with the performance, and loan-asset ratio is in positive correlation with the performance. In addition, the increase on the proportion of trading financial assets can also lead to the improvement of the performance. By finding out the relation between the structure of the balance sheet and the performance, this research has indicated an effective way of the adjustment on the balance sheet aiming for a better performance, with sufficient evidence and objective analysis.