Research On The Impact Of Net Stable Capital Ratio On Bank Profitability

For commercial banks,high leverage and high asset liability rates make them face potential financial risks in the process of operation.In order to prevent liquidity risk,the Basel Committee puts forward regulatory index of net stable fund ratio to guide commercial banks to attach importance to the management of balance sheet and reduce long-term liquidity risk.Subsequently,our CBRC also put forward the same indicators to manage liquidity risk.This paper studies the net stable fund ratio and its impact on bank profitability,which is of great significance for Chinese commercial banks to strengthen liquidity risk regulation and improve profitability.In this paper,the assets about 41 domestic commercial banks related to the balance sheet based on micro data from 2005 to 2016 are not less than 200 billion RMB.The net stable funding ratio as liquidity risk monitoring indicator,return on assets and the net interest margin as the alternative variables of profitability,we establish a dynamic panel model,and in accordance with the relevant Chinese assessment of commercial banks,which will be divided into 41 banks,including systemically and non-systemically important banks.Then we establish empirical model to find that the increase of net stable financing ratio can significantly enhance the average return on assets of systemically important banks and non-systemically important banks in China.For systemically important commercial banks,raising net stable financing ratio will reduce its net interest margin level,but it has opposite effect on non-systemically important commercial banks.This paper also puts forward some suggestions on improving the liquidity risk and the profitability of commercial banks from the bank level and the macro level.