Analysis On The Dynamic Characteristics And Influencing Factors Of Loan Loss Preparation Of Commercial Banks In China

Loan Loss Provision(LLP)is a provision prepared by a commercial bank based on the estimated risk probability of future loan losses,LLP is compensate for the threat of bank assets that can not increase due to the loan losses,in order to increase the ability of commercial banks to resist risks.The ability of provisioning loan losses can make a great significance on maintain a stable and lasting operation of the bank.With the establishment of commercial banks in China's financial industry establish a dominant position,regulators carry out a series of reform on the system of bad debts,from the "one more than two stay","five classification" to "future cash flow discount",our regulations will eventually in line with international practice.In 2011,the CBRC promulgated the "Guidance Opinion on the Implementation of New Regulatory Standards in China's Banking Industry" to establish a system for dynamically adjusting the loan loss.December 2012,The "Third Edition Basel Agreement" of Basel Committee put forward the reverse cycle of excess capital.Many studies think that there are pro-cyclical characteristics in loan loss provisions,there are smooth smoothing motivation,capital management motivation and signal release motivation.However,some scholars have proved that the opposite is true,that is,counter-cyclicality,there is no incentive for smoothing of capital and capital management,and there is no signal release.Due to the large number of commercial banks in our country,it is difficult to cover the full sample and economic cycle of the research.Therefore,the exact answer to the dynamic characteristics of loan loss preparation has not been given yet,and there are few studies on the influencing factors of loan loss provisioning.Therefore,this paper mainly studies two problems,one is the dynamic characteristics of the loan loss preparation of commercial banks in our country and the other is the study of the factors affecting the provision of loan losses in commercial banks in our country.Based on the related theory of loan loss preparation,this paper conducts an empirical test on the dynamic characteristics and influencing factors of loan loss provisions of commercial banks.The main contents include the following parts: First,Growth rate and the relationship between tax and pre-earning earnings to test the dynamic characteristics of loan loss preparation;the second is to build a panel regression model to explore the loan loss preparation and smoothing of earnings,capital management,asset-liability ratio,the next period of tax and pre-,And the next period of non-performing loan changes to determine the possible factors that affect the preparation of loan losses by commercial banks.The empirical results come to the following conclusions: The provision for loan loss in our country has the pro-cyclical characteristics;its provision is forward-looking,and there are also the motives of earnings smoothness and capital management.The smoothness of earnings of listed banks is stronger than that of unlisted banks;However,the signal release(the next period tax and pre-accrued earnings changes)had no significant impact on the provision for loan losses;the effect of the asset-liability ratio on the provision for loan loss losses was significantly positive.According to the empirical results,combined with the requirements of regulators,this paper puts forward some suggestions on China's system of loan loss preparation: further improving the discounted cash flow method in the future and alleviating the pro-cyclical characteristics of nonlisted banks;strengthening the smooth supervision over the earnings of commercial banks and improving the disclosure of information Quality;strengthen the supervision of capital adequacy ratio of non-compliance of banks,do not relax on the capital adequacy ratio of banks have been supervised;to establish a dynamic provision of risk prevention and control system.