An Empirical Study On The Effect Of Bank Competition On Bank Stability In China

In the modern economy and society,the degree of development of the financial system is an important symbol of the modernization of a country.The financial system plays a decisive role in promoting national economic growth.Therefore,the national government is very concerned about the stability of the financial system and regards maintaining financial stability as one of the important goals of government governance.Banks are an important part of the financial system and the largest financial institution in the financial system.The operating income of the banking industry accounts for half of the entire financial system.It has the largest number of operating projects,the highest degree of diversification in the asset-liability business,and the widest operating area.It is called "financial department store".Therefore,the status of the banking industry in China's financial system is very important.The instability of the banking market will cause the financial system to turmoil.When the risk accumulates to a certain critical value,it may lead to a financial crisis and seriously endanger the national economic security.First of all,This study refers to the latest literature at home and abroad,and knows the latest research progress and research status concerning the relationship between banking industry competitiveness and bank stability at home and abroad.In foreign literature,some scholars have studied this issue in the 1990s,but the domestic start is relatively late,which may be closely related to the development of China's banking industry.Up to now,discussions and research on this issue at home and abroad have never stopped.Then on this basis,this study elaborates theoretically on how banking competition affects bank stability.The study finds that increasing bank competition has a complicated effect on bank stability.Therefore,it needs to further analyze different types of banks.Finally,before the empirical analysis,the bank's comparatively classic banking industry competitiveness indicators and bank stability indicators are introduced.Through empirical analysis,we find that there is a U-shaped relationship between banking industry competition and bank credit risk,but there is no relationship between bank bankruptcy risks and the banking industry competition.This empirical study finds that there is a U-shaped relationship between bank competition and bank credit risk,which exists in the whole sample.But there is no relationship between bank competition and bank bankruptcy risk.Under the sub-sample conditions,there is a U-shaped relationship between the competitiveness of joint-stock commercial banks and the bank's credit risk and bankruptcy risk;however,the competition degree of large-scale commercial banks and their relationship are not significant;the competitiveness of urban commercial banks and the bank's credit risk shows a significant U-shaped relationship,and the relationship with bank bankruptcy risk is not significant.Finally,this study combines the results of empirical analysis and provides relevant countermeasures from the perspective of bank supervision.