The Empirical Study Of Chinese Commercial Bank Loan Loss Provision And Fluctuation

Commercial bank’s loan loss provision is to resist from the bank loan risk and extraction it forthat the bank loan can’t take back on time,so that cope with the potential capital requirements.It canprevent from credit risk and make up the bank capital.However,according to the current accountingstandards(accrual accounting),the financial statements reflect that the matters have occurred.As aresult,banks can only be based on the actual amount of the loan loss to prevision loss reserves,and isnot allowed to prevision current losses that has’t occurred yet.In this case,the commercial bank isvery difficult to forecast the future economic cycle to provision the loan losses.Especially ineconomic downturn period,loan quality deteriorated,but in the process of the credit economyupward,the accumulation of credit risk exposure,the bank’s financial situation deteriorates,the riskof bankruptcy is growing.So the banks have to raise the level of provision in a short term, creditscale begin to shrink,thus the macro economic exacerbated recession.loan lossprovision,therefore,to make sufficient or not is directly affected the commercial banks’stableoperation development and macroeconomic stability.Thus,the dynamic provision system,byincreasing the extraction of loan loss during the period of economic prosperity,form a cushionagainst the recession.Through early monitoring, rational expectations and extracting enough loanloss provision to cover bank credit losses,the system not only improve the robustness of thecommercial bank operation,but also makes the macro economy have more flexibility.So thedynamic provisioning system for prudential supervision of financial supervision authorities plays animportant role.This article comprehensively studies the related international system about dynamicprovisioning system, and discusses the development process of our country’s loan loss preparationsystem and present situation.this article,taking the listed commercial banks as the researchobject,using the method of financial analysis and quantitative analysis,research that our countrycommercial bank loan loss preparation provision exacerbates the fluctuations of credit in oourcountry or not.Among them, the financial analysis is mainly on the indicators of similar analysis and trend analysis;econometric analysis is to panel data model,to quantitative analysis the related factorsinfluencing China’s loan loss preparation. The research results show that our country commercialbank loan loss preparation does not change with bank credit increase with the increase of thescale.At last,this article put forward the corresponding improvement suggestions which defects ourloan loss preparation practices.