Research On The Impact Of Loan Concentration On The Profit And Risk Of Commercial Banks

As an important medium of indirect financing,Banks play a central role in the credit department.At present,the main profit source of commercial Banks in China is the credit spreads,so whether the loan of banks is reasonable is of vital importance to the profitability and risk management of commercial Banks.Under the background of interest rate liberalization,commercial Banks' loan policy will be more profit-driven.The result is that commercial bank loans have been concentrated in high quality customers and concentrated in economically developed regions and advantageous industries.This is a reflection of the unbalanced allocation of credit resources of commercial Banks,which will have a certain impact on the operation of commercial Banks.Therefore,it is helpful for China's commercial Banks to improve the management level and promote the stability of China's financial system by exploring the impact of loan concentration on the risks and benefits of commercial Banks.This paper measures the degree of concentration of commercial bank loans from the three perspectives of customer concentration,industry concentration,and regional concentration.Based on the theoretical analysis of the impact of loan concentration on the earnings and risks of commercial banks,This paper analyzed the status of loan concentration and find that commercial banks have concentrated on loans.This article takes a sample of 26 commercial banks' annual data from 2008 to 2016.Using panel data regression models,Regression analysis of state-owned commercial banks,joint-stock commercial banks and city commercial banks is carried to do empirical test on the effect of the earnings and risk of loan in commercial bank loans concentration.According to the empirical results,it can be seen that for different types of commercial banks,the degree of loan concentration has different effects on their returns and risks.Based on the perspective of risk management,different kinds of commercial bank loan concentration management strategies were derived.All sample commercial banks should focus on strengthening the management of loan concentration on customers.The state-owned commercial banks need to strengthen the management of loan concentration on industry.The city commercial banks need to strengthen the management on regional concentration.Based on the empirical results,this paper proposes countermeasures from two perspectives: the transformation of credit management by commercial banks and the establishment of a sound supervision system for loan concentration.The innovation of this paper is to discuss the reasons for the difference of the regression results of different types of commercial Banks,so that the proposed countermeasures are more targeted.