Bank Non-performing Loans In China: An Empirical Study Of Macro Factors

People pay more attention to the non-performing loans of the banks thanbefore.Not only is NPLs the reflection of the individual bank’s profitability、stabilityand core competitiveness,but also one of the most important causes to the financialcrisis.Therefore,it has a great practical significance in analysising the influencingfactors of the ratio of NPLs of China’s commercial banks and proposing thepreventive measures to it.In this article,the author firstly illustrated an overview on the theory of NPLs athome and abroad,then presented the present situation and origin of NPLs of China’scommercial banks,and analysised the interation of macroeconomic and NPLs from thequalitative aspects.In addition the author anaysised it from the quantitativeaspects,and used the data of domestic banks from the fourth quarter in2003to thesecond quarter in2011,according to the characteristics of China’s bank industry,chosefour macroeconomics indics,which are inflation rate(CPI)、narrow money supply（M1）、the total amount of loans(LOAN)and fiscal expenditure (EX),and modelledclassic econometric model and the VAR model between the four macroeconomicindicators and NPLs,it can be more accurately portrayed the whole process of theinteraction of between NPLs and these indics.The results showed that high inflation,the excessive loans in banks for the pursuitof self-interest,the shortage of capital in residents and business or the weak intensityof government expenditure could increase the ratio of NPLs.On the contrary lowinflation or the reduction of the unqualified loans could reduce the radio ofNPLs.Therefore,at the operational level, in order to reduce the NPLs of commercialbanks，we should strengthen the macroeconomic analysis,establish a comprehensiverisk management system，strengthen the examination of the credit funds and othermeasures...