Impact of the Financial Shock by COVID-19 on Profitability and Sustainable Strategies of Chinese Commercial Banks

This study analyzes what variables had a positive impact on Chinese commercial banks in overcoming the COVID-19 crisis in the context of Chinese commercial banks. To this end, a Malmquist index productivity analysis is conducted on the sample, dividing the sample into groups with good productivity before and after COVID-19 (HH) and groups with bad productivity (LL), and then a panel analysis is conducted on each group to compare the determinants of profitability. The main results of the analysis show that Chinese commercial banks with consistently high productivity before and after COVID-19 have higher asset quality, lower cost to income ratio, smaller size, and higher interest income, which have a positive impact on profitability and overcome COVID-19. This suggests that the difference in productivity change between the two groups is due to the fact that they are not as productive as the others. This suggests that the difference in productivity between the two groups is brought about by the allocation of operating resources and operating characteristics of the banks. In the future, Chinese commercial banks can only seek sustainable growth by actively improving their income structure, revolutionizing their business model, and actively responding to the digital transformation.