Assessment Of China’s Listed Commercial Banks’ Vulnerability

Since the spread of capitalist production relations and the development of capitalism commodity economy, banking has entered into a booming period. In the16th century Italian’s currency firmly become the most important currency of the world, which boosted the development of Italian Banks. With the development of Britain’s industry, Britain gradually became world’s financial leaders. After the Second World War, Bretton Woods System made the United States become the world’s financial center. Meanwhile the international banking has gained rapid development. After1970the international banking got into a period of fierce competition, and a large number of banks got into crisis. According to statistics,112systemic banking crises had broken out in93countries from early1970’s to1990’s, and most of these crises happened in developing countries, such as Africa and the Latin American debt crisis, Mexico financial crisis (1994), southeast Asia financial crisis(1997), and Brazil’s financial crisis (1998). Specifically, the US subprime crisis is a typical representative of banking crisis. These financial crises deeply hurt the development of national economy.Commercial Banks began to establish in China in the late1970’s, including large state-owned commercial Banks, medium and small joint-stock commercial Banks, city commercial Banks and rural commercial bank. Some commercial banks begun to list on the stock market, and there are16listed joint-stock commercial Banks so far. By studying the banking crises history, we know that every banking crisis has done great damage to the economy. So we must make deep research on the vulnerability of commercial Banks, to prevent the occurrence of banking crisis, and to maintain the stability of national economy.Firstly, based on the definition of the vulnerability of commercial banks, the relevant concepts of bank fragility were discriminated. And then some basic theories of commercial bank’s vulnerability were introduced, including the financial Fragility hypothesis, Margins of Safety theory, Bank Runs and Deposit Insurance theory, etc. Finally, this article summarizes the domestic and foreign Banks’vulnerability evaluation system. Secondly, this paper explores the internal and external factors of vulnerability of China’s listed commercial banks. The external factors include macroeconomic factors, asymmetric information, public limited rationality, Bank competition and financial environment. The internal factors include the high debt management structure, credit structural imbalances, low levels of income structure, soft budget constraint mechanism and governance structure defects.Then, based on domestic and foreign evaluation systems of the vulnerability, this paper selected17indicators to evaluate the vulnerability16listed commercial banks of our country from2010to2013. The results indicate that the vulnerability of city commercial banks is higher than medium-and-small-scale commercial banks and the large-scale commercial banks.Finally, we can take some measures to resolve the vulnerability of commercial banks and to promote the stable development of China’s banking industry, which include strengthening the internal construction of commercial banks and creating a favorable financial environment.This article has two aspects of innovation. First, previous studies on the vulnerability of commercial bank focused on the vulnerability of the banking system, but studies on specific commercial banks are rarely involved. So the paper Make up for this defect. The second is the time-serial generalization principal component analysis applied in this paper, which utilizes factors-reduction function to build a vulnerability index, but also takes into account the time factor.