Study On Bank Market Structure, Bank Market Equilibrium And Risk-taking Behavior Of Bank

The prominent feature of modern financial crisis is the interbank market confusionand long-term malfunction, excepting information asymmetry, market power,2ndcapital market mal-function, and market imperfections that may result in the interbankmarket collapse. Based on Credit Risk and Liquidity Risk of Bank Market StructureMay have an important impact on bank market equilibrium. At the same time, bank risktaking behavior is an important cause of bank credit risk and liquidity risk, research onbank risk taking behavior influencing factors can be completed of banking marketstructure, strengthen the banking market equilibrium in a certain degree. Therefore,theoretically study the method of banking market structure on the interbank marketequilibrium and empirically study the influence of the government supervision andmarket discipline to Chinese bank risk taking behavior, to improve the banking marketenvironment, improve the government supervision efficiency on banks, improve bankrisk management level and reduces the bank operation risk, security bank market systemto last fast health develops, inhibition of the financial crisis has an very important andsignificance theoretical and practical meaning.The main research work of this thesis is embodied in the following aspects:Firstly, on the basis of the analysis to commercial banks of the quantity, scale,market structure, ownership structure and type, operating performance, risk and itscause of formation, government supervision mode,have a summary on China’s bankingmarket structure and characteristics of bank risk behavioral.Secondly, the theoretical part of this article is taking reference of the representationof bank market structure and the researching methodology proposed by Lucchetta,under the hypothesis that credit risk and liquidity risk are exogenous variables notdetermined by banks themselves, making use of various combinations of credit risk andliquidity risk to express the bank market structure, this paper set up an appropriatemathematical model to theoretically research the effect of bank market structure onbank market equilibrium with maximizing return as the bank decision objective. Theresearch results show that, there must exist bank market structures making bank marketsystem work well and making bank market system collapse respectively in bank marketsystem with any concentration degree of credit risk and liquidity risk, and differentdistributions of liquidity risk and different concentration degree of credit risk and liquidity risk would have significantly different effects on the equilibrium of bankmarket system when variables of the bank market structure are in some interval. Inorder to make the bank market system work well, reasonable bank market structuremust be maintained.Thirdly, the empirical part is based on the comprehensive investigation on theChina’s banking market, taking excess capital adequacy ratio and statutory depositreserve ratio as measurement indicators of the government regulation and the LernerIndex as the measurement indicator of market discipline, using the quarterly data of the14listed banks in China from January2007to September2010and appropriateeconometric models, this paper researches effects of government regulations and marketdiscipline on risk-taking behaviors of commercial banks in China empirically. Theempirical results show that, the excess capital adequacy, market discipline and the bankscale would have obviously positive effects on risk-taking behaviors of China’scommercial banks; while the statutory deposit reserve ratio and the management levelwill have an obviously negative effects; and risk-taking behaviors of state-holdingcommercial banks are significantly less than that of shareholding commercial banks; thebank risk-taking behaviors have a significant memory feature.Finally, from the actual situation in China’s banking market, we put forward severalpolicy recommendations, which are from the interbank market cooperation andcompetition, capital management, corporate governance, financial regulation, andgovernment functions respect to maintain the equilibrium of the commercial bankingmarket and risk prevention.