A Study On The Impact Of Loan Industry Concentration On Non - Performing Loans Of China 's Commercial Banks

We are always paying close attention to commercial banks’ non-performing loans. Not only they affect the bank’s profitability, stability and core competitiveness, but also make the bank in the financial crisis. So it is of great practical significance to analysis the loan of industry that how to influence China’s commercial Banks non-performing loans’ ratio.This article first expounds the theories about non-performing loans at home and abroad, secondly analysis the relationship of the loan concentrated on one industry and the non-performing loans. And then in the aspects of quantitative, this article chooses a banks’ monthly data from January in2010to April in2013,the selects five variables:the ratio of non-performing loans(Y),loan concentration on one industry (HHI),total loan(LOAN), gross domestic product (GDP), the broad money supply (M2),then to do the WLS econometric model and VAR model analysis, in order to depict the process of how the loan concentration on one industry affects the ratio of non-performing loans.Results show that the loan concentration on one industry much will really cause the higher ratio of commercial Banks non-performing loans. So in the management level, we should attach great importance to the study of industry risk warning, set up the early warning system of organization and management, and eventually create a complete and continuous database about industry information, in order to reduce the non-performing loans of commercial Banks.