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Quantitative Analysis of the Profitability of China’s Commercial Banks Based on Factor Analysis

Ying Wei, Jiaming Zhu, Qingling Liu

Abstract


The profitability of a commercial bank is an important factor to measure its comprehensive development level. Taking the 2019 annual data of China’s 16 listed commercial banks as a research sample, the factor analysis method is used to empirically analyze the profitability of each bank, extract four public factors, and calculate the comprehensive score of each bank’s profitability. The research results show that the non-performing loan ratio and risk of joint-stock banks are higher, and the capital adequacy ratio is lower. The comprehensive profitability and anti-risk ability of state-owned banks are better than joint-stock banks, and their finances are more stable. This suggests that commercial banks should strengthen their risk control while increasing their profit margins.

Keywords


Commercial Banks; Profitability; Factor Analysis; Principal Component Analysis

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References


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DOI: http://dx.doi.org/10.18686/fm.v6i1.3265

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