An Empirical Study On The Impact Of Bank Loan Concentration On Bank Risk In China

Credit funds is the most important asset of a bank, credit funds safety is a matter of the bank’s survival, and bank’s stable management relates to the smooth progress of the construction of our country economy. Because of the existence of information asymmetry, the banks are focusing on a small number of popular industries, large enterprises and regions, which are concentrated in the large number of popular industries, enterprises and regions.In this paper, we analyze the impact of loan concentration on bank risk from two aspects of unsystematic risk and systemic risk, in which the risk of unsystematic risk is analyzed. From the loan customer concentration, loan industry concentration and the regional concentration of three aspects of China’s listed banks to focus on the status quo of the loan, and the above three aspects of the bank loan concentration were measured. On the basis of the above, the risk of the bank’s bankruptcy was measured by Z method, and the relationship between the 16 kinds of loan concentration and the risk of bank bankruptcy was tested by 2008-2014. In the risk analysis of bank insolvency, the system risk of commercial banks is measured by the marginal expectation loss (MES) method. The 16 listed commercial banks in 2008-2014 are listed as the Agricultural Bank and China Everbright Bank. The three banks measure time span is 2011-2014.The following conclusions are drawn through empirical regression:Loan customers focus on the risk of bank insolvency and systemic risk have a significant impact on the high concentration of loan customers will increase the risk of bank insolvency and systemic risk. This regulation requires that a single customer credit shall not exceed 10% of the net bank capital and net capital of the group’s customers can’t exceed 15%. Although there is no specific indicator of the industry concentration, but the industry concentration should be paid enough attention. The regional concentration of the loan will significantly reduce the risk of bank insolvency, and significantly reduce the risk of the banking system. According to the research conclusion, the corresponding suggestions are given in the end.