An Empirical Study About The Impact Of Private Capital To Risk Of City Commercial Banks

Recent years,with the guide of Chinese government,the prevention and resolution of financial risks has become an attractive aspect.For the banking industry,the introduction of private capital,which is growing but not fully utilized,has always been an important aspect and positive measure of banking reform.Especially under the background of mixed ownership reform,China have issued multiple files to encourage private capital investment in city commercial banks which linked to local government,to look forward to changing the existing situation,stimulating the vitality of city commercial banks,and reducing the bank risks.However,whether the improvement of private capital level can reduce the risk of city commercial banks is the problem to be discussed in this paper.This paper collected annual reports of the city commercial banks since 2007,by organizing the top 10 shareholders data,we finally get 103 city commercial banks'private capital data from 2009 to 2016,and by using Z-score as the measure of banks'risk variables,we examined the relationship between the private capital of city commercial bank and bank risks.The results show that the level of private capital and Z-score of city commercial banks are positively correlated.With the increase of private capital level,the risk of banks will be reduced.By examined the relationship between the private capital and the three components of Z-score,we found that private capital level and firm performance are significantly positively related,and earnings volatility and the private capital are significantly negatively related,that is,by improving city commercial banks' performance and reducing performance volatility,the private capital finally reduces bank risk.At last,this paper also uses the loan scale as an intermediary variable,it is found that the loan scale has played a significant mediating role in the conduction path of private capital level to bank risk.