Long-term Loans Proportion Affect The Stability Of China's Commercial Banks To Empirical Research

In recent years, the long-term loans share of commercial banks showed rising trend. Because the long-term loans are increasing rapidly, the loan structure showed long-term trend, which may be a growing potential threat for China's commercial banks'stable operation. Thus this paper will study the relationship between the long-term loans share and the level of stability through theoretical deduction and empirical testing.First, this paper infers the relationship between the long-term loans share and bank stability in theory, and puts forward the research hypothesis of inverted U-shaped relationship. Then, based on the bank data of 14 major commercial banks in China from 2001 to 2009, this paper analyses the influence that the long-term loans share has in the bank stability with the application of modified z value method. The main conclusions are as follows:(1) The results conclude that there existed an inverted U-shape relationship between the long-term loans share and bank stability in a significant level, and it could estimate the threshold which makes the relation between the two reverse;(2) Because the long-term loans share has exceeds 40%, the increase of the long-term loans share doesn't produce apparent interest income increase, but has accumulated higher credit risk;(3) The analysis of causes and mechanism points that inverted U-shape relationship is mainly realized by the effect that long-term loans share had in the volatility of return on asset.