The Impact Of Credit Asset Securitization On The Stability Of Commercial Banks In China

Commercial banks are the basic and important parts of China's financial industry.The stability of banking plays a decisive role in the stable and sustainable development of China's financial system and even in the entire economy.Credit asset securitization,as a kind of financial innovation,aims to transform assets with poor liquidity into securities with strong liquidity,which not only helps promoters obtain liquidity,but also enables risk transfer and sharing.However,the development of credit asset securitization in China is still in its infancy.Whether it is suitable for our current economic environment and beneficial to our commercial banks deserves attention.In particular,the financial crisis that originated in the United States in 2008 has very much to do with the excessive use of securities and the accumulation of risks.In view of the prevention of financial crisis,China stopped the pilot work of the securitization for 3 years.Therefore,the advantages and disadvantages of this financial instrument need rethinking.The effect of securitization on the stability of banks is not conclusive.So far,there are two camps that think securitization conducive to stability and unfavorable to stability respectively.Combined with the trend of vigorous development after securitization trials in 2012,we need to explore in-depth about the influence of securitization on bank stability under our specific national conditions.This article first conceptually defines the securitization of credit assets and the stability of commercial banks,and then sorts out domestic and foreign literatures to find out the general approaches from the securitization to bank stability,and finally,based on the status quo of the securitization market this article has empirically tested the overall impact and conduction of on the listed commercial banks in China.In terms of empirical tests,this paper uses the financial data of 20 listed banks in China from 2006 to 2016,and chooses the Z-score as an agent variable to measure bank stability.We use not only the dummy variable of asset securitization but also its derivative variable based on the scale as explanatory variables.A panel model of fixed effects was used to examine the overall impact and specific conduction path of the securitization of listed commercial banks in China,and the five state-owned banks were independently tested.We examined and analyzed the different results of the five major banks and the other listed banks in the securitization business.Finally,we choose non-performing loan ratio as another proxy variable of bank stability to test the robustness of banks,at the same time,we also use the dynamic GMM method to test the robustness of the basic model,making the empirical analysis more reliable.Through empirical analysis and the description of the actual situation of credit asset securitization market,this paper concludes that securitization is not conducive to the stability of China's listed banks.However,because of the status of the five state-owned banks,the negative effects of securitization are not significant to the five major banks.In addition,in the way of securitization affecting bank stability,we have concluded that based on the composition of the Z-score,securitization reduces bank's stability by lowering the bank's profitability and equity ratio.Finally,this paper puts forward relevant recommendations,including constructing the securitization laws and regulations,expanding the type of basic assets,guiding the development of non-performing asset securitization,strengthening financial supervision,etc.,aiming to make the securitization of credit assets able to comply with the original intention to improve the bank stability.