Research On The Relationship Between Banks' Franchise Value And Risk Behavior In China

In recent years, since the finance situation has been developing rapidly both in home and abroad, the problems that how to control the risk of banking industry and operate steadily have been received more and more attention. Therefore, domestic and foreign scholars have carried out extensive research on these problems and attained a series of fruits.In the past, the study on the banks' risk and the stabilization of the financial system, scholars mainly concerned on the influence of macro level to risk behavior, which included banking supervision. While few of them considered this problem in the scope of the bank's micro behavior. Franchise value that is the present value of the excess profit got by business continuous operations in future provides a good way to research. In traditional theory, the decline in franchise value may enhance a bank's motivation to take risky activities. Is it true? At China's special financial background, which factor has a decisive influence on the change of franchise value? How dose the change of franchise value affect and challenge the banking supervision in our country. To answer the above-mentioned questions, this paper illustrates the relationship between our commercial banks' franchise value and its risk behavior.This paper applies the method of combining qualitative analysis and quantitative analysis to solve these problems. At first, based on the domestic and foreign scholars' research, this paper analyzes the economic implications of franchise value and defines the concept of the banking franchise. The method applied by this paper is selected and disposed after analyzing and contrasting the methods that measure banking franchise. This part was the qualitative part of the article. Second, this paper compares the franchise value of 29 banks, including our city commercial banks, and analyzes the franchise value's tendency. Through establishing model and constructing panel data, we conduct empirical analysis and testing the relationship between banking franchise value and its risk behavior. The essay divides the two parts into six chapters and the main content of each chapter is as follows: The first chapter is introduction. This part induces the background and the significance , the methods and structure of this paper, introduces the innovation and shortages of the article.The second chapter is the relevant theories of the franchise value, including abroad related research and domestic related research.The third chapter, forth chapter and the fifth chapter are the key parts, combining qualitative analysis methods and quantitative analysis methods. Firstly, defines the concepts of franchise value, induces theoretical basic and measurement methods. Second, this paper compares the franchise value of our city commercial banks, and analyzes the franchise value's tendency. Finally, through establishing model and selecting panel data, we conduct empirical analysis and test the relationship between banking franchise value and its risk behavior, meanwhile, we also go into the relationship among the franchise value, bank scale and bank supervision.The sixth chapter combined the analysis of this paper and the current situation of our country's banking industry, we bring forward some suggestions to improve the stability of china's banks.The significance of this paper depends on systematically and completely reflecting the relationship between the franchise value and risk behavior, through analyzing the risk behavior using the three subdivide indicators, which are the indicators of the banks' overall risk, the indicators of credit portfolio risk and the indicators of compensating risk. Just in the same way, we put forward our own views and opinions on the supervision and competition of banking. Besides, in the part of quantitative analysis, we firstly increase the sample of city commercial banks which is the supplemental force of our banking industry, this makes our analysis completely. Furthermore, considering the background that our city commercial banks are merging, reorganizing and trans-regional operating all over the country, this paper can be beneficial to guide the healthy development of our city commercial banks.