Thifie Influence Of Diversed Management On The Domestic Commercial Banks’ Risk

Along with the commercial banks involved in the wave of global financialintegration gradually, commercial banks begin to change the current simplific andassimilated management pattern, and expand the business profit growth space beyondthe traditional ways. The choice will narrow the gap with foreign banks’ matureoperation mode, and reduce the potential risk when the scale and form of traditionalbusiness is not the dominant. Transform to the diversified strategic has been airreversible trend, which makes the study of the effect of diversified business oncommercial banks’ risk as an important task of commercial banks. The paper willexamine the effects of diversification on the risk of the commercial bank on the view ofthe scope economy of the diversification strategy. From the practical perspective, theresearch firstly will provide the evidence for the banks’ business strategy on thenon-traditional business, secondly will provide constructive suggestions for researchingon commercial banks’ reasonable management scope, and the research have guidingsignificance for the regulators to take regulatory measures. From the theoreticalperspective, this selected topic is an important supplement of the existing research, thatis able to provide policy advice to coordinate safety and profitability of commercialbanks.Firstly, the paper introduces the development path and development motivation ofthe diversified development in our country’s commercial bank, and takes the descriptiveanalysis of the present diversified development condition of the commercial banks onthe relevant data. Then the paper establishes its theoretical basis on the synergy and itsalienated risk theory, that is, when the commercial banks take diversificationmanagement and pursuit the scope economy, on the one hand, the risk will be reduceddue to the achievement of the scope economy, on the other hand, the complexdiversified development and business will bring the alienated risk, the two aspectscauses the uncertainty of the commercial banks’ diversification. Based on thistheoretical foundation, the paper collects the relevant financial panel data from2006to2011of the16listed commercial banks in China, and adopts the scope economiccoefficient, which will be measured using the logarithmic function, as the measure ofdiversified business. Finally, the paper establishes the empirical risk analysis model, thatcan be used to analysis the commercial banks’certificated operation risk.The paper’s main conclusion is that the greater the scope economy of the diversified management, the lower the management risk of banks, but its impact may belimited by the alienated risk realizing in the process of pursuit the economic of scope,thus the effect of reducing risk has been not significant. Also in the process of research,this paper finds that the current development space of diversity is very big, the level ofnon-interest accounted only equivalent to less than half of the developed economies.The diversity of our country’s commercial bank own a low development degree, and thedevelopment degree of the scope economy is high, so the commercial banks shouldovercome their own development obstacles, strengthen the business innovation, and digdeeper into the market demand, to improve the level of diversification on the premise ofrisk control. Facing the unreasonable and unsteady factors of the diversification,regulators should form a complete set of regulatory system and legal system, and guidethe commercial banks to carry on the prudent development, improve the awareness ofrisk control, and grasp the core competitiveness. The commercial banks should trip outof the prison of homogeneous development, and draw the reasonable boundaries ofdiversified development.Compared with the predecessors’ research, the paper’s innovation points areembodied in four aspects. Firstly, different from the past research, that focused on theeffect of diversification on commercial banks’ performance, the paper chooses theresearch aspect that the influence of diversification on commercial banks’risk. Thus wecan learn the effect of diversified development of commercial banks comprehensively.Secondly, different from the past research, that always studied the commercial banks’operating risk from the commercial banks’ scale, or from the non-interest incomeproportion, the paper studies the commercial banks’ diversified operating risk from theeconomies of scope. Thirdly, the paper’s research bases on the Synergistic effect and therisk of alienation theory, which provides theory basis for the uncertainty on influence ofthe scope economy on commercial banks’ diversified management risk. Fourthly,according to the development of practice and research, the paper has broken thetraditional definition of economies of scope, and difined it at a broader category, that iseconomies of scope includes the benefits obtained from the horizontal or verticaldiversified extensions.