<p>This paper examines the impact of banks’ overall and specific types of noninterest business on the effectiveness of the bank lending channel (BLC) of monetary policy transmission in China. Developing an optimal decision-making model for banks considering business diversification and using the panel data of 236 commercial banks in China, we find that fee and commission business enhances the effectiveness of BLC through the "linkage effect," while trading business weakens it via the "reservoir effect." Due to the combined effect, the overall noninterest business weakens the effectiveness of BLC. We also find the impact is more pronounced in the period of expansionary monetary policy compared to the period of contractionary monetary policy, demonstrating a strong asymmetry. We further find heterogeneous evidence and demonstrate that the effect of noninterest business is more pronounced in banks with insufficient liquidity, low capital adequacy level and high credit risk, as well as local banks with small scale and limited market power. These findings are informative for both policymakers and practitioners.</p>