Research On Influence Of Size On Risk-taking Of Domestic Commercial Banks

After the America 's subprime mortgage crisis in 2008, The collapse of large financial institutions triggered a financial systemic risk,The America 's subprime mortgage crisis evolved into a global financial crisis.The trouble of large commercial banks' risk-taking become the problem which government and related regulatory institutions must solve, and the relationship between the scale and the risk has attracted more and more attention?If the level of bank risk-taking will increase with the expansion of bank scale,it will appear the phenomenon of “too big to fail” when the bank's size and risk reach a certain extent.The problem of “too big to fail” is too difficult to solve.Usually it will produce a vicious cycle, and than triggered a financial crisis.Therefore the key is prevention, which requires to research the relationship between the scale and the risk-taking of domestic commercial bank.We should confirm whether the level of domestic commercial banks' risk-taking increases with the expansion of it's scale, if it dose, We need control the scale of banks in advance, to prevent the problem of too big to fail.At first, this paper theoretically argued the relationship between the scale and the risk-taking of domestic commercial bank,and put forward a hypothesis:commercial Banks had u-shaped relationship between their scale and risk-taking.The article has two empirical analyses, there are overall analysis and classification analysis respectively. The overall analysis uses stratified sampling, choose 18 banks' date in2005-2013 years,it include 5 state-owned Banks, 8 joint-stock banks and 5 city commercial banks.We use Generalized method of moments(GMM) to estimate the model, confirm that the relationship between size and risk-taking presents u-shaped structure.For further in-depth study of the difference between different types of commercial Banks in our country, the article classified and analyzed. For further studying of the difference between different types of commercial Banks in our country,the article has carried on the classification analysis. The classification analysis classify81 banks into 3 groups,there are state-owned banks,joint-stock banks and city commercial banks,and than respectively uses GMM to estimate the model.Finally, the article come to several conclusions:First, the scale of state-owned commercial Banks and it's level of risk-taking has significantly u-shaped relationship.It's risk-taking level will increase with the expansion of the scale.So therelevant institutions need to take some corresponding measures to limit or slow down their expansion. Second,non-state-owned commercial Banks' scale level is reducing with the expansion of it ' s size. So non-state-owned commercial Banks should be encouraged the increase of bank scale appropriately. Third, through improving the ability of corporate governance can reduce banks' level of risk-taking.