An Analysis Of The Diversification Impact Of Chinese Commercial Bank To Bank Risk

Since the 1980 s, with the further development of financial integration and liberalization,financial business innovation and acquisition have emerged in endlessly.They set off a wave of financial diversification in the word. Chinese commercial banks are still implementing separate management system at this stage,but they have begun to change their business philosophy actively. They are breaking the tradition single business, and promoting financial product innovation.They carry out other non-traditional business constantly to achieve changing from "single operation" to "diversified operation". Although Chinese commercial banks cannot be compared with mature foreign banks on the diversification level from current development degree,but from the situation, the trend that Chinese commercial banks promote business diversification strategy has become inevitable. Therefore, it comes into being that research of the relationship between diversification and commercial bank risk.In this paper,it studies the relationship between business diversification and commercial bank risk by adopting the combination of qualitative and quantitative methods. In the theoretical section,this paper describes the development history 、status and problems of the Chinese commercial bank diversification. Then it emphasis on the operating mechanism of the impact of business diversification on bank risk. It means that in the process of bank business diversification, on one hand,the business diversification has risk dispersion effects;on the other hand, the new business will conduct a new risk to offset risk diversification effects. In the part of empirical analysis, this paper constructs three based analysis group by using data from five state-owned banks, eleven shareholding banks and eighteen city commercial banks.Then it make revenue volatility decomposition and panel regression analysis separately based on the asset portfolio analysis.And it analyzed the correspondence relationship between based groups’ business diversification and risk in detail.Research findings:first, business diversification of Chinese commercial bank has risk dispersion effect,and state-owned banks is better than shareholding banks and city commercial banks;second,the impact of business diversification on risk of Chinese commercial bank is not significant.At last in the paper,it puts forward some suggestions to effective development of business diversification of Chinese commercial bank.On one hand,strengthening internal business diversification development of commercial bank.Specificrecommendations:deepening financial product innovation 、 strengthening risk awareness、highlighting the main industry and core competitiveness and so on;on the other hand, improving the external environment of the banking industry. Specific recommendations:establishing functional supervision system、improving the business diversification related legal system and so on.