With the depth of promoting the interest rate market reform, tightening regulatory capital , as well as the evolution of economic restructuring , banking and payment status of social finance intermediaries face serious challenges as an intermediary , the British banking tradition to spread income as the main source of growth mode will be difficult to sustain . Commercial banks must accelerate the transformation of Britain's traditional business and profit model , by enhancing the innovation capacity of commercial banks to deepen the reform of corporate governance . Innovation is an eternal topic . Goal is to improve the ability of enterprises to innovate innovation performance [ 1 ] , to keep the enterprise sustainable competitive advantage. Profitability is one of the bank's business objectives , which is the commercial bank efforts to improve the innovation capability of the important reasons . In this paper, the regulatory environment in the banking risks , the relationship between commercial banks innovation capability and business performance between the empirical analysis to explore the influence on the performance of the innovation capability of the UK banking reform path selection also has a reference value.

Theoretical analysis and indicator selection
Theoretical analysis

Innovation is an effective way to organize access to resources and transforming resources and shape differences are important factors that affect the ability of the core , and thus become the organization to gain competitive advantage , improve their performance on the basis of [ 2 ] . Governance and operating performance aspects important goal is the pursuit of commercial banks operating performance , a lot of research on bank performance , these studies mainly relying on commercial banks' corporate governance mechanisms, such as ownership structure, the board and senior management as well as external regulatory incentives , but from the perspective of innovation ability of commercial banks to study the correlation between research and business performance is also less . Innovation capacity of commercial banks is reflected in all aspects of commercial banks when a bank's ability to innovate to improve governance levels throughout the bank's management, innovative culture , organizational structure and processes and so have a greater improvement in the combined effects of various factors the result would have a positive impact on the banking business performance.
First, commercial banks have a range of economic effects of innovation capability . Commercial banks ability to innovate is largely reflected in the products and services provided by the number of banks on . Under the " financial disintermediation " worsening situation increasingly stringent banking regulation , commercial banks are bound to have an innovative impulse to play as much as possible through innovative ability to break through the limitations , so that their businesses can be more profitable to carry out smoothly , thereby increasing profits. Therefore , commercial banks innovation capacity is often expressed as increase access to capital , to develop and deliver more new products and services and other ways to achieve. This innovative ability to play in the process , the bank is bound to expand the scope of business , expanding the scope of business will bring down the operating efficiency and improve commercial banks' average operating costs , resulting in economies of scope . Furthermore , when the bank's business scope expanded , the original risk structure will change accordingly . With the expansion of business scope, scattered along the bank's operational risk , as long as the banks are able to effectively control the credit risk and operational risk , which does not increase the scope of economic and other much additional risk will generally reduce the overall risk of commercial banks. Therefore, from the point of view of the range of economic , commercial banks will bring innovative ability to raise bank operating performance levels .

Secondly , when the commercial banks to improve innovation capacity , will reduce transaction costs for banks . Multi- agency relationship banks determine the characteristics of transaction costs is the cost structure of the bank is an important component. When commercial banks through innovation provides a convenient means of trading and low transaction costs for customers , when the volume of business will greatly enhance the commercial banks , the volume of business promotion will bring significantly improve bank performance. For example , the current large-scale commercial banks instead of using a non- cash business cash business ; through self-service transactions , online banking transactions and mobile banking transactions in the lobby waiting for customers to save time . The new form of trading and both are convenient for customers , customers save transaction costs , create value for customers . Banks while creating value for customers , but also realized the value of their own promotion. In addition, the commercial banking business with knock-on effect , when a commercial bank to bring convenience to customers through a particular business innovation , networks tend to produce reactions , customers will choose an item in the convenience business, choose another of the bank's business.

Finally , based on the innovative concept of resource capacity perspective , innovation ability of commercial banks on the one hand, the development and utilization of existing resources , and tap the potential value of resources and improve efficiency ; hand can get resources and existing resources to integrate new , which continued to use the resources and transforming organizations to build competitive advantage and further [ 3 ] . Thus , innovation is an effective way to organize access to resources and transforming resources and shape differences, thus becoming the organization to gain competitive advantage , improve performance foundation.
Based on the above analysis, we can find innovative ability of commercial banks have a positive a positive impact on bank performance , this article will validate the positive correlation between innovation capacity and operating performance between banks .

Indicator selection

According to various aspects of literature , there is no authoritative indicators of banking innovation capacity currently collected to measure. For Britain , the intermediate business income can better demonstrate the bank's ability to innovate , can be an important innovation ability evaluation index to measure the strength of the bank , but also has its own rationality . First, since the elements of innovation ability of commercial banks , many are difficult to effectively measure , intermediate business of commercial banks as an innovative business that can bring innovation to their business income , which is the integrated use of a variety of innovative commercial bank resources embodied . Intermediate business income countries of the Western banks have accounted for 40% -60 % of total revenue, while the most innovative business intermediary business . Second, many scholars from a number of innovative products , respectively , the number of patents , sales of new products such as the output angle to evaluate the innovation capability of enterprises, intermediary business revenue can represent innovation capacity output of commercial banks, so the intermediate business income as the level of innovation ability evaluation index of commercial banks have referenceable . Finally , financial innovation performance of commercial banks generally innovative products and services , commercial banks tend to get a new source of profit through the development of new financial products , conquer new markets , changing management methods, along with new technology innovation process application and scope of the economic advantages of enhanced transaction costs will continue to decrease, thereby promoting banking efficiency. The main features of the commercial banks in recent years, innovation and performance sheet and securitization , innovative banking products and services, the effect of various fields in the middle of the ultimate expression of the general business income which , therefore , the revenue structure of banks may reflect to some extent level of bank innovation capability . And, as technology advances, financial disintermediation , deregulation and market competition intensifies, intermediary business , develop innovative products are also increasingly become the mainstream trend of the international banking industry (Kaufman and Mote [4]; Allen and Santomero [5] ) . Therefore, the choice of the innovation capacity index [ 6,7 ] , we choose the bank intermediary business revenue ratio of total operating income as a measure of banking innovation capability index . Zhu Yingying , etc., etc. Xing and Zhang Jianbin absolute number of intermediate business income as a proxy variable banking innovation capability . This paper argues that the use of relative indicators measure more reasonable , so you can avoid the large- scale effects on the bank's ability to innovate false statistics ingredients. In terms of corporate performance measure , mostly by foreign scholars reflect the company's market value Tobin'Q indicators, but the impact of the particularity of the UK stock market and the shareholding structure of listed companies by domestic scholars have mostly used the total return on assets (ROA) and net assets yield (ROE) and other financial indicators to measure corporate performance , there are a small number of studies while using these two types of indexes . In a related study, a measure of profitability for banks generally use the following four indicators: return on assets (ROA), return on equity (ROE), net interest margin (NIM) and non- interest income ratio (NIR). The ratio of net interest margin is the difference between interest income and interest expense to total assets , to reflect the bank to deposit and loan pricing power for both services , but the default value of the index too , so should not be used as the main indicator of performance appraisal . Other non-interest income refers to income other than interest income in addition , due to the Bank of England is still the main deposit and loan business , profits mainly from spread income , non- interest income ratio (NIR) the same can not very well describe the bank's operating performance . Moreover, according to analysis, the commercial banks in the conduct of business innovation , the level of bank governance has an important impact on bank performance . In summary, for the British commercial banks during the actual performance of bank governance performance affected the study sample , and learn from relevant research literatures , this paper to determine the yield of the bank 's total assets (ROA) and earnings per share (EPS) as a measure of Bank performance level indicators , including : total return on assets (ROA) refers to the ratio of net profit to total assets of the bank , is the performance of the bank statement and balance sheet business operations plus total revenue ; earnings per share (EPS) means the net profit and total equity ratio , showing that the external value of the bank market price , both can well reflect the level of performance of banks.

Study Design
The study sample

Sample selection , the paper to the Shanghai Stock Exchange and Shenzhen Stock Exchange Bank , Nanjing Bank, 16 commercial banks for the study, the sample data from the 16 listed banks in the Shanghai Stock Exchange and the Shenzhen Stock Exchange as well as public disclosure of banks annual Report 2007-2011 to 1966. Through the analysis of the data , the Agricultural Bank in 2007 is not applicable to the data portion , which is mainly due to the commercialization of the background of the Agricultural Bank , Agricultural Bank of China completed change of business registration in January 15, 2009 , the restructuring of state- owned commercial banks as a whole Corporation . In view of this , the first part of the ABC vacancies vacancy of test data , but empirical results are not very satisfactory. Therefore, this paper were excluded in the empirical part of the ABC data , in order to take annual data 15 listed banks empirical analysis.

Variable selection and definition

Based on the above analysis , it was determined the yield of total bank assets (ROA) and earnings per share (EPS) as a measure of the level of bank performance indicators . As a bank intermediary business innovation business, while profitable for the bank is bound to also accompanied by risks, combined with the requirements of the British banking authorities , choose the level of risk on behalf of banks following indicators : capital adequacy ratio (CAR) is a bank its risk assets ratio , the purpose is the ability to monitor banks to withstand risks , especially innovative businesses to curb excessive expansion of risk assets , to ensure the normal operation and development banks ; non-performing loan ratio (NPL) to total non-performing loans of financial institutions the proportion of loans outstanding , a measure of the quality of assets of commercial banks ; liquidity ratio (CR) is an important measure of the security situation and short-term corporate financial solvency ; bank size (SC) is the natural end of the total assets of the bank number ; ratio of deposits and loans ratio 1 Table 1 Variable names and variable names defined a symbol a defined return on total assets 1ROA1 Bank net profit to total assets ratio of net income per share 1EPS1 innovation capacity of the total share capital 1ZSR1 intermediate business income / operating income × 100% non-performing loan balance of non-performing loan ratio 1NPL1 / loan balance × 100% capital adequacy ratio 1CAR1 net capital / ( risk-weighted assets + 12.5 times the market risk capital requirement ) × 100%, not less than 8% of assets flowing the sex ratio 1CR1 liquidity ratio as the ratio of current assets to current liabilities , the Bank shall not be less than 25% the size of 1SC1 scale refers to the number of bank deposit ratio 1LDR1 loan balance / balance of deposits of natural bank 's total assets at the end of × 100% Note: The above calculation method defined variables banks annual report relevant data from , or directly from the CBRC official statistical indicators variables. (LDR) is the ratio of the balance of the bank loans and deposits between used to measure liquidity risk of commercial banks. In this paper, choosing a bank intermediary business revenue ratio of total operating revenue (ZSR) as a measure of banking innovation capability index , based on the above analysis of each commercial bank risk management and control factors and innovation capacity factors were relationship between ROA and earnings per share explore innovative business banking conducive ways and means .

Statistical Process and Empirical Analysis

In this paper, Stata11.0 software -related data index system over the years except the Agricultural Bank of 15 listed banks in selected processed into descriptive statistics and analysis of a two-stage model estimation . An Empirical Analysis of the process, will be divided into two parts deal with : ( 1 ) analysis of the relation between innovation capacity and total assets yields ; ( 2 ) analysis of the relation between innovation capacity and earnings per share . The following is a two-part model estimates and the results of the analysis process . In this paper, respectively, ( 1 ) , ( 2 ) two empirical content section labeled , respectively, the model estimated ROE EPS estimate analysis and model analysis .

Model architecture
According to the existing literature on the relationship between basic research and innovation capacity on bank performance , the following panel data model :
ROAij = α0 + α1ZSRij + α2NPLij + α3CARij + α4CRij + α5SCij + α6LDRij + μi + εij (1)
EPSij = β0 + β1ZSRij + β2NPLij + β3CARij + β4CRij + β5SCij + β6LDRij + μi + εij (2)
Which , α1-α6 and β1-β6 represent the coefficients of each variable , μi representatives sectional fixed effects , εij is a random error term , α0 and β0 is the intercept amount .
Descriptive statistics

According to the sample data , using Stata11.0 software for analysis , total bank assets yield and innovation capability descriptive statistical results are shown in Table 2 .
Model estimation results
Model analysis of return on assets is estimated

Table 3 shows the results of the listed bank data regression . In Table 3 , according to the characteristics of the panel data model ( 1 ) , ( 2 ) , ( 3 ) , respectively, presented a mixed effects regression results of the fixed effects regression and random effects regression. Model ( 4 ) consider the endogeneity problem, use lag intermediate business income accounted for a variable period as a tool to measure the results of innovation capability .

Model for the screening , the need for a series of tests . First, in order for mixed effects regression and fixed- effects regression screening , the need for the F-test , the null hypothesis of the test is to use a mixed-effects model , there is no individual effects . Since the model reflects the effect of the individual variables is μi, therefore , the null hypothesis is that all of the tests μi = 0. The measure got an ability to innovate regression results in Table 3 1 ( 1 ) mixed-effects 1 ( 2 ) fixed effects 1 ( 3 ) random effects 1 ( 4 ) instrumental variable method 10.039 *** therefore , reject the null hypothesis and accept the alternative hypothesis. That model is the existence of the individual effects, the fixed effects model is superior to the mixed effects model.

Secondly, for the fixed effects and random effects models were screened to conduct Hausman test. Hausman test the null hypothesis that the random effects is more effective. Because whenever a random effects model estimates are valid , and if the fixed effects model is also effective, fixed effects model is better than no bias on the random effects model. Therefore, if reject the null hypothesis , then the fixed effects model with random effects model is valid ; And if we accept the null hypothesis indicates that the fixed effects model does not have validity and effectiveness of the random effects model . The measure , Hausman 's chi-square test is :

chi2 (7) = (bB) '[(V_b-V_B) ^ (-1)] (bB) = 22.95
Corresponding P_Value = 0.0017.

Therefore, we reject the null hypothesis , choose a fixed effects model as the final model .

As can be seen from Table 3 , innovation has a positive impact on the operating performance of commercial banks , and by the 1% significance test , the results significantly . This is consistent with our theoretical expectation that banks can improve performance by increasing the bank's ability to innovate . And from the absolute value of the coefficient of view, all the independent variables in the largest marginal impact on innovation capability .

From the other variables that affect bank performance point of view , the impact of non-performing loan ratio of bank performance is not significant , that is, commercial banks operating performance does not depend on the problem of bad loans . Even the presence of non-performing bank loans, but as long as the controllable range , and will not affect the performance of the bank. At the same time , it also shows that the performance of commercial banks in the UK are currently non-performing loan ratio is insensitive , even commercial banks deficiencies in risk control , but under the umbrella of the national implicit guarantee , it will not affect the operating performance of the bank's fundamental .

Capital adequacy ratio there is a positive impact on the bank's operating performance and significant at the 1% level of significance . This shows that commercial banks' capital adequacy rate, the bank's risk-bearing capacity will be increased accordingly , and the risks and benefits generally inverse relationship , therefore , the bank's operating performance will improve.

Liquidity ratio is positively correlated to the performance of the role of banks , and in 1% significance level significantly . Liquid assets are the most important assets of the commercial banks to obtain profits , when the ratio of liquid assets to improve bank earnings of commercial banks have significantly improved. This is consistent with expectations.

Impact of bank size on bank performance is negatively correlated only significant at the 10 % significance level . This is not the same with our expectations . Under normal circumstances, there are economies of scale banking , when the expansion of bank size , return on total assets of commercial banks should also be improved. However, our empirical results do not show this feature , the main reason may be due to the current UK banking basic or extensive development mode. Many commercial banks blindly expand outlets, the pursuit of scale copy of " spheres of influence " approach to achieve scale through a simple network , while the value of the excavation, the market investigation did not place, in this case, the size of the bank on the banks performance does not produce a positive effect , which explains the need for change in the UK banking business development model .

Deposit-loan ratio on bank performance is negatively correlated, and at the 5% significance level significantly . Generally, speaking from the perspective of bank profitability , loan ratio the higher the better , because the deposit is to pay interest , which is called the cost of capital , if a lot of bank deposits , loans rarely , it means that it is the high cost , and less revenue, profitability of banks on the poor. However, the regression results can be seen , the impact on bank performance loan ratio was negatively correlated , suggesting that commercial banks from another angle though is for profit , it will find ways to increase the proportion of deposits and loans , but only deposit ratio constitutes a restriction on direct loans , and directly contributes to the bank deposit interest rates go up efforts to try to increase lending . The rising cost of funds would constitute an obstacle to reduce lending rates , which forced the fierce competition in the industry and quality customer choice tendencies , banks had to reduce lending rates in order to gain a competitive advantage, so the banks did not bring substantial performance improvement . This also explains why many banks widespread quarter-end , the end of "surprise pull deposit" even in disguise " to solicit depositors high interest " phenomenon , and the gradual liberalization of the interest rate market and constrain the extensive mode of development banks .

In addition , in order to verify the robustness of the model, the model in Table 3 ( 4 ) using the method of instrumental variables regression analysis . Since this intermediate business income as a proxy for innovation capacity , there is a correlation between the explanatory variables with the inevitable, and therefore prone to the problem of endogenous variables . To eliminate the effects of endogenous variables , we used the intermediate business income of a lag in the regression analysis as a tool of entry variables were instrumental variable regression . We found that the result is consistent with the foregoing analysis , it also reflects the robustness of the model used .

EPS estimate analysis model

To further verify the reasonableness of the above model , we use earnings per share as the dependent variable , the above argument again regression results are shown in Table 4.

Model selection process , F screening test results mixed regression and fixed effects regression is : F (14,53) = 5.90, corresponding P_value = 0.0000. Therefore reject the use of mixed-effects model , the fixed effects model is more effective.

Hausman test results in the fixed-effects and random effects model was chosen :
chi2 (7) = (bB) '[(V_b-V_B) ^ (-1)] (bB)
= 22.951 Table 4 Earnings per share as the dependent variable in the regression results 1 ( 1 ) Mixed Effects 1 ( 2 ) fixed effects 1 ( 3 ) random effects 1 ( 4 ) model, fixed effects model is consistent with the estimated model , but it is more than a random effects model more efficient . Therefore, we chose a fixed effects model as explanatory model .

In addition , in order to verify the consistency of the model , the model ( 4 ) gives the results in order to avoid endogeneity problems using instrumental variables to estimate , consistent with the model ( 2 ) conclusions.

As can be seen from the results in Table 4, the use of earnings per share http://www.400190.com/jr/as the dependent variable yield with the use of assets as explanatory variables in the regression results are presented overall consistency . As the center of this study, the impact on earnings per share of the bank 's ability to innovate is positively correlated with the 1% significance level by testing . This is consistent with the results of the use of asset yields.

Other control variables , only the size of a bank regression results to differ materially . In the use of the asset yields as a result of the regression variables , the marginal effects of bank size is negative , and only significant at the 10 % significance level ; regression model variables , the marginal due to the size of banks and the use of earnings per share as impact is positive , and in the 1% significance level significantly . The reason is primarily related to the calculation of the dependent variable . When expanding the size of banks , often while increasing banks' assets , which will undoubtedly reduce the yield of the bank's assets ; while expanding the size of the bank and will not bring about changes in the capital structure , while revenue increased scale will drive revenue brought increase , so the impact on the size of the bank 's return on assets is negative , and the impact on earnings per share is positive. This does not affect the interpretation of the intensity of the core variables of this article . Conclusions
Through empirical analysis to study the relationship between banks and business performance innovation capability between . Considering the banking sector overall business environment , the article focuses on the relationship between commercial banks examine innovation capabilities and performance of banks under the risk management and control . Empirical study, we use 15 commercial banks in the UK is currently listed for five years panel data model for analysis. In order to verify the consistency of the model, we also analyzed the use of instrumental variables method , empirical results found consistency . The study found that innovation ability of commercial banks have a significant positive impact on bank performance , the bank can improve its operating results by improving the innovation capacity.
From the impact of risk management and control indicators for bank performance point of view , the impact of non-performing loan ratio of bank performance is not significant , the capital adequacy ratio, liquidity ratio and bank performance was significantly positively related to the size of banks , savings and loan impact on bank performance ratio negative correlation . Meanwhile, the empirical results also explain why many banks widespread quarter , year-end "surprise pull deposit" even in disguise " to solicit depositors high interest " phenomenon . Many commercial banks blindly expand outlets, the pursuit of scale , the value of the excavation, the market investigation is not in place , in this case, the size of the bank does not produce a positive impact on bank performance , while the interest rate market is gradually liberalized and constraints the extensive mode of development banks . This also explains the need for change in the UK banking business development model .