The Research Of The Relationship Between Market Competition,Economic Fluctuations And Risk Behaviors Of Commercial Banks

The relationship between competition, the macroeconomic operation and financial stability has always been an important issue in the academic circles and financial authorities around the world. The main reason of the American Subprime Crisis in 2008 is the excessive risk-taking by commercial banks, which is triggered by the excessive financial innovation from the excessive market competition. Due to the pro-cyclical feature of bank system, this unstability eventually evolved into a financial crisis, especially under macroeconomic fluctuations. Basel ? is the product of the crisis, it arises series of innovative regulatory framework, including counter-cyclical capital regulation to relieve the pro-cyclical behavior of banks. Economic growth in China goes into New Normal, coupled with the increasing fierce in bank sector, make the ratio of non-performing loan of bank goes high. So it has great practical significance to research banks' risk behavior deeply, including promote the development of banking steadily and perfect the regulatory and supervisory.Based on the above real background, this paper uses the panel data of 13 listed bank in China from 2000 to 2014, and takes empirical analysis to examine the relationship of banks' risk-taking behavior between macroeconomic fluctuations and the competition, then further discusses the influence of market competition on banks' pro-cyclical risk behavior. The results show that, the relationship between competition and acts out nonlinear. And the banks' risk-taking has significantly positive correlation with macroeconomic fluctuations. It means the banks' risk-taking behaves in a pro-cyclical way, and it also plays asymmetric influence in expansion and slack time. The pro-cyclicality in state-owned banks perform stronger. The leap of investment and credit amount is the important reason to the increase of risk in expansion period. What's more, banks with low competition are more inclined to behave in a pro-cyclical way than those with high competition.