The Loan Loss Reserve Management Research Of Commercial Banks Of Our Country

The loan loss reserve is extracted based on the expected loan loss of commercial banks, its full provision directly relates to the bank’s sound operation and financial stability. After the global financial crisis in2008, all the banks in the world pay more attention to the management of the loan loss reserve.The main objectives of this paper are as follow: Firstly, to analyze the foreign and domestic loan loss reserve system, especially the provision method, so it raises the deficiencies and improvements of the provision method of the existing loan-loss provision system. Secondly, according to the present situation analysis of the total sixteen listed banks’ loan loss reserve, include the large state-owned commercial banks, the national joint-stock commercial banks and city commercial banks, then through the analysis of the theory and the accounting to discuss the subjective and objective factors that affect Chinese commercial banks extract loan loss reserve. Thirdly, on the basis of using gray correlation analysis to explore the factors that affect Chinese commercial banks extract loan loss reserve, then through the panel data analysis, this paper analyzes the objective factors that affect commercial banks extract the non-discretionary loan loss reserve, and the subjective factors that affect commercial banks extract the discretionary loan loss reserve. Lastly, this paper puts forward the countermeasures to strengthen the management of loan loss reserve for the commercial banks.This paper obtains the following three results: At first, through the present situation analysis of the sixteen listed banks’ loan loss reserve, it finds that since2005, the rate of non-performing loan is decreasing, provision coverage ratio and loan provision rate are all increasing for all the banks; overall level of non-performing loan ratio of the large state-owned banks is higher than the national joint-stock banks’ and city commercial banks’, and the overall level of provision coverage ratio is lower than the other two types’, the loan reserve rate has no marked difference for the three types of banks; three types of banks all show varying degrees of pro-cyclicality in their loan-loss provision extracting. Then, through theory and accounting analysis, the objective factors that affect commercial banks extract the non-discretionary loan-loss provision include macroeconomic prosperity, bank sizes, the volatility rate of non-performing loan, etc; and the subjective factors that affect commercial banks extract the discretionary loan-loss provision include earning management, capital management, etc. Finally, through gray correlation method and panel data analysis, this paper concludes the subjective and objective factors that affect Chinese commercial banks extract the loan loss reserve.Based on the above research results, it suggests that the countermeasures to strengthen the management of loan loss reserve for the commercial banks are as follows:first of all, Chinese commercial banks should manage loan loss reserve in order to achieve the risk control and regulatory indicators; then according to commercial banks’own interests demand, they can try to manage the discretionary loan loss reserve effectively to achieve the purpose of earning management and capital management.