The Influence Of Loan Concentration On Commercial Banks' Risk In China

Based on the realistic background of deteriorating asset quality and rising loan concentration in China' s commercial banks under the downward pressure of the economy.This paper combs the existing research results at home and abroad on the effect of loan concentration on commercial banks' risk,it also analyzes the impact of commercial banks' loan concentration on their asset quality and risk in theory.Then,this paper selects three indicators of industry concentration,regional concentration and customer concentration to calculate the degree of loan concentration of China' s commercial banks,and a fixed effect model is applied to analyze the panel data for 2010-2016 on listed commercial banks in China.It is found that the centralization of customers and regional of commercial banks all have a negative impact on commercial banks' risk,that is,the higher loan concentration,the greater risk borne by commercial banks.On the one hand,although China' s commercial banks have put a lot of loans on large customers,the risk is relatively low because the large customers are state-owned enterprises,these customers have less substantial breach of contract,and under the customer concentration,commercial banks will have lower supervision cost and more targeted regulatory effects.On the other hand,the eastern region has a developed economy,a large customer base,a large number of listed companies,the information between banks and enterprises is relatively transparent,and companies have more financing options.Therefore,it is less risky for banks to put credit resources in the eastern region.In addition,it is also found that industry concentration has a positive impact on commercial banks' risk,that is,the higher loan concentration,the greater risk borne by commercial banks,which shows that commercial banks have placed more assets in areas where the risk is higher or vulnerable to the influence of policy regulation,leading to the downlink of asset quality and the accumulation of risk.Combined with the current downtrend of China's economy,tightening market financing environment and increasing probability of corporate loan default,it can be predicted that China's commercial banks will have to face greater downward pressure on asset quality in the follow-up.According to the conclusions of this paper,combined with the current situation of strong supervision in financial industry,in order to guard against and defuse risk of the loan concentration,improve asset quality and give full play to the positive role of commercial bank in promoting and upgrading the industrial structure,servicing the real economy and the national strategy,this paper proposes that regulators should make up for the lack of supervision,formulate specific monitoring indicators,and strengthen the implementation of the system.On the other hand,commercial banks should enhance the quality of internal control,the ability of risk early-warning and optimize the credit structure.Besides,the increase in the level of capital supply is also conducive to resolving the risk of loan centralization.