Analysis on Size Effect to Commercial Banks Operation

Analysis on Size Effect to Commercial Banks Operation ——Based on comparisons of CMB bank and CCB bank Member: 刘英英、田爽、张小慧、李雪君

Differences CCB CMB Big banks Small banks

CCB A leading joint-stock commercial banks CMB China's first entirely by the enterprise legal person shares of joint-stock commercial bank

Assets CMB CCB

Net loans and advances to customers The CCB lack the incentives lending to SMEs. The CMB familiar with customer’s credit and operating conditions. Solve the problem of information asymmetry. the CMB has the advantage in relationship lending CMB CCB

Liabilities Deposits from customers The CCB has a higher bank credit. The CCB has more bank branches. CCB CMB

Income Non-interest income CCB The CCB is easier to transformation . CMB

Invest The CCB has a bigger long-term investment. A higher rate of return. CCB CMB

Loans Short-term loans CMB is much larger than CCB. Medium and long-term loans CCB is much bigger than CMB. CMB CCB

Distribution of loans by overdue term the longer the term, the banks should bear the risk of more probable that the borrower can not repay the loan CCB CMB

Deposit the majority of customers also chose a short-term time deposits, temporarily put the money in the bank to wait for better investment opportunities. CCB CMB

Financial Ratios CCB has a higher ROE CCB ‘s borrowed funds investment is bigger than CMB. The financial leverage can increase the efficient use of funds.

CMB has a higher NIM. CCB’s cost is higher than CMB. CCB has a higher non-performing loans ,but the loan ratio is low. CCB has a poor supervision on loans , didn’t properly assess the borrower’s repayment ability. CMB has a higher level on loan-to-deposit ratio CCB put more deposits in investment.

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Analysis on Size Effect to Commercial Banks Operation