Empirical Study on Determinants of Net Interest Margin for China's Commercial Banks

This paper examines the determinants of the interest margin of China's commercial banks by use of panel data regressive analysis. The results show that: the interest margin of the previous year, possibility of default, degree of risk aversion, bank sizes as well as the growth rate of GDP are main determinants of the interest margin. While, there exists differences in the patterns of interest margin between state-owned commercial banks and joint-equity commercial banks. The marginal contributions of possibility of default and the growth rate of GDP are not significant for state-owned commercial banks, but significant for the joint-equity commercial banks. The size of banks, cost opportunities, as well as quality of management is not significant for joint-equity banks, but significant for state-owned commercial banks.