A Study Of Loan Concentration And Its’ Impact On Commercial Banks’ Performances

Under the new normal economy,China actively advocate building an innovative country,the masses entrepreneurship,the more innovation,helping to promote industrial restructuring and upgrading.Since 2015,the China Banking Regulatory Commission issued on "about 2015 small micro enterprise financial service work guidance",leading to the spread of commercial banks loans to many small and micro enterprises.This kind of behavior will affect the bank’s loan structure,especially the loan concentration.However,there are few researches on it,so this paper will try to find out whether the loan concentration will affect the performance of commercial banks.The research object of this paper is the 20 listed banks in China’s Shanghai and Shenzhen Stock Exchange(for the comparability of data,excluding the 2011-2015 years through mergers and acquisitions the city commercial bank).This paper draws lessons from the four levels of the "financial enterprise performance evaluation method",which is issued by the Ministry of Finance in June 2016,and has a total of 13 indicators to evaluate the performance of banks.And using Factor analysis method to obtain the main factors of the 9 data of the 20 banks(because of the accessible of the data),then according to the contribution rate of each main factor to determine the weight of each main factor,and ultimately get the comprehensive performance of the 20 banks in 2011-2015.Next,we use the ratio of the largest single client’s total loans to the net capital and the ratio of the largest ten single customer loans to the net capital to represent the loan concentration.Then,we use the data of the twenty banks in 2011-2015,constructs a regression model by using the stata professional statistical analyses.The conclusion is that loan concentration have a significant positive correlation on the performance of China’s commercial banks,there are two reasons as follows:on the one hand,enterprises monopoly the bank’s loan resources which leads banks loan resources flow from the low efficiency enterprises to the high efficiency enterprises.According to the theory of monopoly,when the monopoly extend to a certain extent,it can promote the performance of the whole market,what’s more,a few companies control a large bank’s loan resources,which can not only reduce operating costs,but also improve the performance of commercial banks,so when the concentration increases,the performance of commercial banks also increased.On the other hand,when the bank’s loan concentration is low,banks need to spend more time or money to manage the enterprises who borrowed money from the bank.At the same time,because of the information asymmetry,the banks have to rating the enterprises especially the micro-companies,which also increases bank’s costs.As the numbers of enterprises borrow money from bank increased,the risk of asymmetric information of the banks increased.So the decrease of loan concentration caused a decline in the performance of commercial bank.While commercial banks target is not only about making money,it also burdened the responsibility to help making the country better,so at last,we suggested that commercial banks not only need to actively respond to national policy,actively provide loans to small and micro enterprises,but also need to rate the enterprise credit information,in order to improve the performance of commercial banks.