An Analysis Of The Impact Of Leverage Rate On The Performance Of China's Commercial Banks

At the end of 2008,the US subprime mortgage crisis erupted rapidly into a global financial crisis,which had a huge negative impact on the global economy.From the industry point of view,the banking industry was the most affected.Academics have blamed excessive leverage in financial institutions for the crisis.To this end,‘Basel?' used leverage as a new tool for regulating commercial banks.China's Banking Regulatory Commission also timely proposed the management of leverage ratios of commercial banks to constrain commercial banks.Commercial banks have been in a dominant position in the financial industry,which is directly related to the operating conditions of the lifeblood of the national economy.Also,Financial institutions,‘deleveraging' became a hot word in recent years.Leverage ratio as a new regulatory tools are bound to affect the business performance of commercial banks,in a certain range of appropriate increase in leverage is conducive to the bank's profitability,but if the leverage is too high,will in turn increase the financial risk even restricting the development of the commercial banks.Therefore,this paper starts with leverage regulation,aiming to explore the impact of leverage on the business performance of commercial banks.This paper collects the leverage ration data and related financial indexes of 26 listed commercial banks from 2007 to 2017.Based on the definition of ‘leverage' is different from the existing literature on use leverage as a way to explain variables directly,but by 2015 the measures for the management of commercial bank leverage(revised)definition of leverage.This paper also obtain leverage's cycle value by HP filtering method,and taking absolute value to express the fluctuation of leverage rate.Firstly,this paper briefly analyzes the theory of leverage regulation and its advantages and disadvantages and the current situation of leverage ration of commercial banks in China.The leverage ration of commercial banks is generally higher than the regulatory requirements,and the overall trend is on the rise.From the comparison of different types of banks,the leverage ration of state-owned commercial banks is significantly higher than that of non-state-owned commercial banks.Secondly,this paper uses factor analysis method to calculate the comprehensive performance scores of each bank,and the quantified performance score is used as theexplained variable,the leverage rate and leverage rate fluctuation are taken as explanatory variables,and the panel data is returned.The result shows that the leverage rate have significant negative effects on the performance of commercial banks.In addition,this paper further uses Z-SCORE as the explained variable and derive the conclusion that increasing the level of leverage can increase the Z-SCORE value of commercial banks,which means that higher leverage levels can reduce Bank's risk appetite.In order to ensure the stability of the conclusion,this paper introduces the virtual variable ‘dull' representing the commercial bank type to return,and the conclusion is consistent with the geberal regression conclusion.Finally,aiming at the conclusion of this paper,this paper puts forward some suggestions from the regulatory level of leverage and the level of commercial banks operating.