BUSN20019 Assessment 1: Net Interest Margin Impact Analysis

This report analyzes the impact of the net interest margin (NIM) on the profitability of listed banks in China. The research aims to evaluate this impact, focusing on the commercial banking sector. The report outlines the field of research, data collection methods, and research questions, such as the effects of low interest rates on customer deposit margins. It relies on secondary data from Chinese public service departments and commercial banks. A literature review is included, referencing studies that explore the relationship between interest rates and bank risk. The report examines how NIM, reflecting the difference between interest earned on loans and interest paid on deposits, influences the financial performance of these banks. Key findings and conclusions regarding the correlation between NIM and bank profitability are presented.

Running head: ANALYSIS OF THE IMPACT OF THE NET INTEREST MARGIN
Analysis of the impact of the net interest margin on the profit of the listed banks in China
Name of the student:
Name of the university:
Author note:

1ANALYSIS OF THE IMPACT OF THE NET INTEREST MARGIN
Aim of the research: To evaluate the impact of the net interest margin on the profit of the listed
banks in China
Field of Research:
The field of research related to this report, is based on the commercial banking sectors of
China. The field of research aims in finding the net interest margin so as to indicate the
profitability of the banking organization in China while showing their earn of interest from the
loans, product credits as compared to the interest that is paid on the certificate of deposits.
Data collection:
Source of Secondary Data:
Secondary Data are well-defined as investigation data that are previously gathered or are
accessed by researchers. It is often used to upsurge the sampling size for the studies of research.
For this research, the common source of secondary data is collected from public service
departments of China such as from different commercial banks.
Research Question:
What are the effects of low interest rate on the margin for customer deposit in the Chinese
commercial banks?
Literature review:
According to Geng et al., (2016) the lower rate of interest on the customer deposits can
lead to bank risk. The possible reasons for such risk can be stated as for example, if the market

2ANALYSIS OF THE IMPACT OF THE NET INTEREST MARGIN
rate of a national interbank is low for 3 months, then the commercial bank will have lowering in
the cost liabilities and as a result of which the bank faces risk of low liquidity.

3ANALYSIS OF THE IMPACT OF THE NET INTEREST MARGIN
References:
Boateng, A., Huang, W., & Kufuor, N. K. (2015). Commercial bank ownership and performance
in China. Applied Economics, 47(49), 5320-5336.
Dong, Y., Firth, M., Hou, W., & Yang, W. (2016). Evaluating the performance of Chinese
commercial banks: A comparative analysis of different types of banks. European Journal
of Operational Research, 252(1), 280-295.
Geng, Z., Grivoyannis, E., Zhang, S., & He, Y. (2016). The effects of the interest rates on bank
risk in China: a panel data regression approach. International Journal of Engineering
Business Management, 8, 1847979016662617.
Qi, M., & Zhang, J. (2018). What Determines Interest Margins? The Case of Chinese Banks.
In Contemporary Issues in Banking (pp. 239-251). Palgrave Macmillan, Cham.