Study On The Impact Of County Financial Ecological Environment On The Profitability And Risk Of Rural Commercial Banks

In recent years,with the adjustment and transformation of China's economic structure,the risk pressure of financial sector is gradually increasing.The formation of financial risk is not only related to the internal management level of financial institutions,but also to the level of financial ecological environment in the region.Previous literatures on financial ecological environment mostly focus on the regional and urban level,but few on the county level.However,since the 16th national congress of the communist party of China,people have paid more and more attention to the development of counties.This paper aims to study and analyze the county financial ecological environment,and further explore its impact on the profitability and risk of local agricultural commercial banks.On the basis of comparing the financial ecological environment evaluation system at the regional level with that at the county level,this paper proposes four components of the financial ecological environment evaluation system at the county level,namely,economic foundation,government governance,education,technology and financial supervision.Taking Jining city of Shandong province as an example,this paper constructs the financial ecological environment system of each county in Jining city,and uses the principal component analysis method to make an objective evaluation and score.After that,this paper took the four common factor scores of economic foundation,government governance,education,science and technology and financial supervision as input factors,took the deposit and loan balance/regional GDP of financial institutions as output indicators,and used DEA-Malmquist index method to study the financial eco-environmental efficiency of each county in Jining.Combined with the score of the county financial evaluation system and the efficiency measurement,the county financial ecological environment is analyzed and evaluated comprehensively.Then based on the 11 counties of Jining,2005-2013 as sample,this paper used the generalized least square method(FGLS)to build panel regression model,in order to study the county ecological environment influence on bank profitability and risk profile,and found that:(1)the higher the overall level of the county financial ecological environment,the lower the bank credit risk,and the better the profitability;(2)the higher the level of economic foundation,government governance,education,technology and financial supervision,the lower the credit risk of rural commercial banks and the higher the profitability.Finally,this paper puts forward some suggestions on optimizing the county financial ecological environment,reducing the risk of financial institutions and improving the profitability of rural commercial banks.