Non-standard Creditor’s Rights Business And Stability Of Commercial Banks

The statement of the Nineteenth National Congress of the Communist Party of China proposes to improve the financial supervision system and keep the bottom line of guarding against systemic financial risks,while preventing systemic financial risks is the essential footstone.Different from western developed countries,credit market is still the most important financing market in China.Banks are the main supplier of capital in the credit market.To prevent and resolve major risks in the financial system is to guard against banking risks.Banking system stable,finance system stable;finance system stable,economy grow stable.Compared with traditional credit business,non-standard creditor’s right business is growing to be an important off-balance sheet business of commercial banks.Its large scale and fast development have drawn close attention of the authorities.The people’s Bank of China along with other relavant regulatory authorities jointly issued “the guiding opinions on regulating the asset management business of financial institutions”,and began to comprehensively rectify the non-standard creditor’s right business in the financial industry,so as to bringing the financial business back to origin and serving the real economy.Therefore,under this background,it is of practical significance to study the impact of non-standard creditor’s rights on the operation stability of commercial banks.To construct a scientific approach evaluating the impact of non-standard creditor’s rights on commercial banks,this study would be conducive to putting forward practical direction of regulatory reform.In the process of China’s financial reform,due to the booming shadow banking system,the control of interest rate and the restricted credit product variety in China,the domestic development of non-standard creditor’s rights led by banks had attracted enormous attention from regulatory authorities and academia.However,because of the insufficient information transparency of non-standard creditor’s rights and the particularity of China,the non-standard creditor’s right business of commercial bank has not inspired research upsurge in academia.Research of domestic and international scholars mainly focus on the impact of commercial banks’ shadow banking business on bank’s robustness.Throughout the existing research,there are still several problems that should be paid attention to.Firstly,China’s non-standard creditor’s right business is different from foreign credit asset securitization,and does not belong to the category of foreign shadow banking: non-standard creditor’s right business is the non-standard product of creditor’s right business carried out by commercial banks,while asset securitization is the standardized financial derivative product.Shadow banking is an important fund provider of commercial bank asset securitization.Although non-standard creditor’s right business involves important financial institutions in the market,it originates from the credit loan business of commercial banks.In the chain of non-standard creditor’s right business,commercial banks act as fund provider.Secondly,the relationship between non-standard creditor’s right business and China’s shadow banking: unlike foreign shadow banking,China’s shadow banking is the channel of commercial banks,and shadow banking is closely related to commercial banks.Commercial banks dominate the shadow banking system through non-standard creditor’s right business and are the ultimate risk bearers.Therefore,analyzing the robustness of commercial banks from the perspective of shadow banking still not comprehensive enough.Non-standard creditor’s right business is initiated by commercial banks,and it not only influence the commercial bank dominated shadow banking system,but also act as an important root of impact on the stability of commercial banks.However,few current researches provide comprehensive and systematic study focusing on the impact of non-standard creditor’s right business on the stability of banks.Based on China’s financial development,financial innovation and banking stability,financial supervision and arbitrage,interest rate marketization,transaction costs and other financial theories,this paper analyzes the economic reasons for the development of non-standard creditor’s right business in China.By analyzing the logic and existing problems of the development of non-standard creditor’s right,this paper points out the relevant potential risks associated with the steady operation of banks.In order to test the impact of non-standard creditor’s right business on the operation stability of banks,this paper uses the annual panel data of major commercial banks in China from 2006 to 2018,takes the purchase of resale and receivables investment as the proxy variables of non-standard creditor’s rights of commercial banks,and uses the dynamic panel system GMM estimation to analyze the impact of non-standard creditor’s right business on the operation stability of banks.The empirical research reveals that,the proportion of non-standard creditor’s right assets has significant positive relationship with bank ROA,which means,non-standard creditor’s right business improves bank profitability.This paper further constructs the Z-value index to investigate bank’s operational robustness,and draws the third research conclusion that the asset proportion of non-standard creditor’s rights has significant negative relationship with bank’s Z-value,which means,the non-standard creditor’s right business weakens bank’s operational robustness.China’s shadow banking is dominated by commercial banks through a variety of non-standard creditor’s right business,and the impact of this kind of business on commercial banks is more direct.Therefore,this paper studies the impact of non-standard creditor’s right business on the operation stability of commercial banks from a more accurate and specific perspective.Compared with the existing research,the main contributions of this paper includes: Firstly,this paper provides a theoretical basis for non-standard creditor’s right business.From the perspectives of China’s specific financial industry structure,financial regulatory arbitrage and interest rate marketization reform,this paper puts forward the internal evolution logic of the development of China’s non-standard creditor’s right business,so as provides an economic explanation for the development of China’s non-standard creditor’s right business.Secondly,this paper no longer limits to the perspective of shadow banking,while for the first time takes the non-standard creditor’s right business as the research object and emphasizes on its impact on the operation stability of commercial banks.Utilizing the Dynamic Panel System GMM Estimation,this paper systematically studies the impact of non-standard creditor’s right business on the operation stability of commercial banks from perspectives of ROA,capital adequacy and Z-value,which proves the necessity of transformation of non-standard creditor’s right business of commercial banks.At the same time,based on the data of non-standard creditor’s right asset proportion of banks of different sizes in China,and the issuance of regulatory documents on non-standard creditor’s right business in 2013,this paper takes national banks and local banks as sub samples to further discuss the various impact of non-standard creditor’s right business on profitability,risk-taking and robustness of banks of different sizes before and after the issuance of regulatory documents,which provides a reference for deepening the regulatory reform of bank non-standard creditor’s right business in China.Thirdly,this paper focuses on the non-standard creditor’s right business for the first time,highlights the important role of banks act in the development of non-standard creditor’s right business,and quantitatively analyzes the impact of non-standard creditor’s right business on bank debt risk.It is found that non-standard creditor’s right business increase bank debt risk,so it is proposed that non-standard creditor’s right business should "Back to the real from the virtual" and take serving real economy as fundamental orientation.This paper also examines the influencing mechanism of non-standard creditor’s right business on bank debt risk,and puts forward that the increase of bank debt risk led by non-standard creditor’s right business is not because of insufficient information transparency,but because of the endowment of financial resources.Findings of this research provides a reference for improving China’s non-standard creditor’s right business and deepening the related financial reform.