Research On The Impact Of Local Government Bond Issuance On Commercial Banks In China Based On The Perspective Of Income And Risk

This paper aims to analyze the impact of China's local government debt insurance system to commercial banks.Based on the current local government debt issuance system,this paper has carried on the analysis of the influence from the perspective of the returns and risks,which the local government debt insurance system act on commercial banks.First of all,this paper mainly adopts the methods of qualitative analysis and quantitative analysis to analyze the return effects from the perspective of current situation and future development.On the one hand,this paper analyzes the interest rate gaps among the current local government debt,bank loans and urban construction investment bond,which considers and discusses the influence of local government debt issued to commercial banks' earnings.On the other hand,taking into account the trend of local government debt issuance rate and future liquidity,as well as benefits from the other business,which derived from the local government debt,such as local debt underwriting,local government debt borrowing,asset securitization and other emerging business,this paper analyzes the return effects on commercial banks.Secondly,on risk analysis,this paper starts to analyze the effect from the perspective of interest rate liberalization,considering the the impact of local government debt issuance to the credit risk of the banks' balance sheet and the banks' risk management mode.Finally,from these two aspects comprehensive analysis--return and risk,and combined with the current domestic macroeconomic situation and the interest rate marketization,this paper provides the following suggestions : firstly,commercial banks should continue to promote the marketization process of local government debt issue pricing;secondly,commercial banks need to continue to look for and find the other local debt issuance derivatives business model;thirdly,commercial banks should revitalize the stock of local government debt assets and strength local government debt liquidity by using securities lending,asset securitization,etc.;last but not the least,commercial banks need to adjust the risk management system to adapt to the situation of local government debt issuance in order to reduce risk and increase profit.