Study on the Impact of Net Interest Margin on Income Diversification of A-Share Listed Commercial Banks

This paper, based on quarterly data from listed commercial banks in China, constructs a two-way fixed-effects panel model to analyze the impact of quarterly net interest margin on income structure diversification. Sub-sample analyses are conducted for state-owned banks, joint-stock banks, urban banks, and banks of different sizes. The results show that a decline in NIM significantly promotes income structure diversification, prompting banks to increase non-interest income such as fees, commissions, and investment income to cope with the pressure of reduced interest income. The responses to this vary among different types of banks, with state-owned banks showing more significant diversification effects, while joint-stock banks exhibit weaker effects.