Research On The Impact Of Non-interest Business On Banking Systemic Risk

With the continuous improvement of China's financial market,the correlation between financial institutions has been continuously enhanced.The hidden risks behind the financial crisis are no longer just individual risks in the traditional sense,but comprehensive and overall system risks.In recent years,under the background of the continuous development of financial disintermediation and interest rate marketization,commercial banks have continuously carried out business development and innovation in order to meet people's growing financial needs.The proportion of non-interest business has increased rapidly,and competition in the financial market has become increasingly fierce.However,as non-interest businesses bring profits to banks,problems such as imperfect bank business models and inadequate supervision may lead to inter-bank risk contagion and spillover effects,which will ultimately lead to the outbreak of banking system risks.Therefore,China's financial supervision is constantly strengthening now,emphasizing the importance of preventing and controlling banking system risks to ensure the security and stability of the financial market.The regulatory agencies have begun to adopt a series of regulatory measures to regulate the development of non-interest business and take strict precautions against the risk of the banking system.This paper mainly studies the impact of non-interest business on banking systemic risk from both theoretical and empirical perspectives.After studying and sorting out the relevant literature,this paper first analyzes the impact mechanism of non-interest business on bank risk assumption and the transmission mechanism of banking systemic risk,and then draws the preliminary theoretical conclusions.Then,the conditional value at risk(Co VaR)is selected as the risk measurement index of the banking systemic risk,and the non-interest income ratio(PNII)and banking business concentration(DIV)are selected as the non-interest business measurement indexes.Based on the quarterly panel data of listed commercial banks in China,this paper establishes a fixed effect model and obtains the empirical results:(1)The development of non-interest business will reduce the banking systemic risk without considering the scale characteristics.(2)Considering the characteristic variables of bank scale,the development of non-interest business of large-scale banks helps to reduce the banking systemic risk,but exits a lag.The increase of the proportion of non-interest business of small-scale banks will aggravate the banking systemic risk,but the lag is not obvious.Finally,according to the research conclusions,this paper puts forward suggestions from both bank and government supervision:Banks should continue to deepen financial product innovation and promote diversified development of banking business.Besides,banks need to strengthen information disclosure,provide underlying asset list in accordance with the law,strengthen risk awareness and coordinate business innovation and risk prevention.Government departments should implement penetrating supervision to prevent business risks,strengthen functional supervision and adopt differentiated management.