Determinants of Profitability of Listed Commercial Banks: A Case of China

The method least square panel was adopted to analyze the determinants of profitability of 16 listed commercial banks in China, from 2010 to 2015. As found by the study, the profitability of listed banks is associated not only with the characteristics taken on by banks, but also with how the financial markets are structured. More evidently, the Non-performing loan losses ratio, reserve rate, and equity ratio are negatively correlated with the profitability. Markedly, Herfindal- Hirschman Index, X-Efficiency, Non-interest rate and profitability were positively correlated with each other. The z-score and profitability are not evidently positively correlated. To improve their profitability, China's listed commercial banks are required to facilitate their operation, control operating costs, increase efficiency, and further reduce the NPL ratio.