A Study Of The Benefit And Risk Of China City Commercial Banks Cross-regional Operation

Some of the city commercial banks have promote cross-regional operation developmentroad since2006, benefit and risk of cross-regional operation become a problem worthstudying.This article focuses on two aspects of city commercial banks cross-regional operation,the benefits and the risks. Select24city commercial banks from2006-2012as a sample,Trying to point out the changes and reasons for benefits and risks brought about by citycommercial banks cross-regional operation by collecting relevant operational indicators data.In the aspect of benefits, this article describes the overall situation of city commercial bankscross-regional operation. What’s more, some relevant business indicators will be comparedbetween branches of local and other regions. After comparison, we found that citycommercial banks made a progress in asset growth, asset quality and profitability, branches inother regions made a great contribution to the headquarters in the aspects of loan and profit.Some large city commercial banks operating in other regions have a great trend of catching upwith the headquarters location. In the aspect of risks, this article selects RNPL (ratio ofNon-Performing Loan) as a measure of risk, research the influence of cross-regional operationof risk on the basis of GDPS (GDP Standard), BRA (branches in other province), CCAR (corecapital adequacy ratio), LCR (loan concentration ratio) and other variables. Empirical resultsshow that city commercial banks with large assets size could reduce the risk of RNPL bysetting up branches in other provinces and operating in regions of different level of economicdevelopment. City commercial banks with small assets size could increase the risk of RNPLwith blind expansion. Therefore, we can’t generalize that whether city commercial banksshould cross-regional operation, city commercial banks should identify the market positionby actual situation and adopt different paths of development.