The Influencing Factors Analysis Of Non-performing Loans Ratio Of Agricultural Bank Of China

With the completion of shareholding system reform and the successful listing of AgriculturalBank of China, Agricultural Bank’s non-performing loan ratio and loan scale all achieve the"double down", non-performing loan problem appeared to have been effectively alleviated. Datafrom the China Banking Regulatory Commission statistics, however, we can find that, although theestablishment of the Agricultural Development Bank of China shed ABC a lot of bad loans, theabsolute amount and non-performing loan ratio is still worried, non-performing loans and badloans in the total amount are the highest among the state-owned commercial banks. So the researchof influencing Agricultural Bank’s non-performing loans ratio has a theoretical and practicalsignificance.This article starts from the concept and basic theory of non-performing loans, and it has beenclear about the definition of bad loans and the international recognition of the standards forclassifying loans into five categories. Through the analysis it is concluded that the current situationand characteristics of bad loans in Agricultural Bank of China, starting from the theoreticalanalysis of influencing non-performing loans in ABC, and drawing lessons from domestic andforeign relevant results, selecting2008-2012each quarter seven indicators such as gross domesticproduct（GDP）growth rate, growth rate of money supply（M2）,capital adequacy ratio of ABC, aproportion of total debt and loan, the relative size, provision for coverage and net interest margin,through the establishment of multiple linear regression model to analyze the influence of differentfactors. The analysis results show that the GDP growth rate and money supply M2growth rate arenegatively related with the non-performing loan ratio of ABC, means that the higher the GDPgrowth rate and growth rate of M2, the non-performing loan ratio is lower, the opposite it is higher;Agricultural Bank capital adequacy ratio, relative size, provision for coverage and net interestmargin are negatively correlated relationship, means that the bigger capital adequacy ratio, relativesize, provision for coverage and net interest margin, the lower Agricultural Bank of China’snon-performing loan ratio, the opposite it is higher; proportion of total debt and loan are positivelyrelated to the non-performing loan ratio, the higher proportion of total debt and loan, the lowerratio, the opposite it is higher.Finally, on the basis of theoretical analysis and empirical analysis, from two aspects of stockof incremental prevention and resolving targeted proposals and suggestions are put forward.Mainly includes optimizing the external environment of preventing non-performing loans, such as creating a good credit environment, transforming government function, deepening the reform ofenterprises; Improving the capacity of prevention of ABC, such as strengthening the analysis ofeconomic cycle and industry, establishing a sound credit risk management system; Dissolve thecountermeasures are suggested, such as improving profitability of ABC by strengthening financialinnovation, selling the securities of non-performing loans, fostering capital markets, striving forstate policy support, etc., in order to reduce the non-performing loan ratio of ABC.