An Empirical Analysison The Impact Of Non-performing Loan Rate Of China's Commercial Banks On Its Capital Profit Rate

Commercial banks are an important part of China's financial system.From the previous financial crisis,the commercial bank's run-off is an important driving force for the financial crisis.The risk of commercial banks is directly related to the banking industry's operating conditions and society,of course the health of the economy.The Basel Accord stipulates that commercial banks must strengthen their management of their risks to prevent possible economic changes.China's supply-side structural reforms in the current period,the elimination of overcapacity by enterprises,the financial "de-virtualization" and the policy of building the real economy have been deeply implemented.However,the new nornai economy has obvious pains.The non-performing loan ratio is the ratio of the non-performing loan amount of commercial banks to the total loan amount,and is one of the indicators for controlling the credit risk of commercial banks.The impact of non-performing loan ratio on the profitability of commercial banks can be reflected by their capital profit rate.Non-performing loans and their proportions directly reflect the social and economic investment situation and business operations,and are the vane of social and economic development.Therefore.in this context,it is very meaningful to study the impact of non-performing loan ratio on capital profit rate.Firstly,this paper analyzes the current situation and causes of non-performing loans of China's commercial Banks in detail by collecting and sorting out relevant data of commercial Banks.The development process of non-performing loans in China's commercial Banks can be divided into three stages according to the development of commercial Banks,the policy changes of regulatory authorities on commercial Banks and the changes of economic situation.The first stage was before 1999.Due to the impact of the Asian financial crisis and the initial implementation of China's economic restructuring policies,as well as the lack of supervision of non-performing loans in China's commercial Banks,the non-performing loan ratio and non-performing loan balance is "double rise".The second phase was from 1999 to 2003.China's banking regulatory authorities began to control the non-perform ing assets of commercial Banks,and set up four asset management companies,Huarong,Orient,Great Wall and Cinda;to divest the non-performing assets of the four state-owned Banks.During this period,the non-performing assets and non-performing assets ratio of China's commercial Banks were in a state of "double decline".The third phase was from 2003 to 201 0.With the deepening of the reform and opening up policy and the accession to the WTO,the state has strengthened the governance of non-performing loans in commercial Banks.During this period.China's economy developed rapidly and the bank credit scale expanded.Although affected by the financial crisis from 2007 to 2008,the proportion of non-performing loans in the total credit gradually decreased.Then through the internal factors and external factors to explain the causes of non-performing loans.Then this article through to non-performing loans affect the profit margin of capital theory are discussed in this paper,the current non-performing loan ratio of capital profit margin mainly through four channels to realize the influence of the first channel is the vulnerability of financial institutions,Banks face the information not perfect market conditions,information opaque corporate project case,the adverse selection and moral hazard problems part;The second is to consider the impact on capital profit margin from the perspective of credit business.In the face of non-performing loans,Banks often need more assets to repair,resulting in loss of assets or increased opportunity cost of assets.Although the securitization and transfer of credit assets can partially transfer and disperse credit risks,activate non-performing assets,and improve the liquidity and yield of credit assets,it still cannot fundamentally solve the problem.The third is in the activities of Banks.When the asset quality changes and the non-performing asset ratio increases,the bank has to spend a certain cost to judge.review and deal with.or even write off the unrecoverable loans and bear the losses.When economic downturn or financial crisis occurs,loan principal and interest cannot be fully recovered,and asset liquidity management is poor,customers' trust in commercial Banks will be greatly reduced.The fourth point is the investment business.As for the capital profit rate of non-performing loans,commercial Banks,through the diversification of capital allocation,guarantee to increase the income of investment business at a lower risk.To enhance the liquidity of assets by allocating products with high liquidity to prevent possible risks.If unforeseeable factors are encountered and the management lags behind,the increase of non-performing assets of commercial Banks may cause a greater impact on the capital profit margin of Banks.Next through the non-performing loans of the overall situation and according to the classification,according to the level of risk classification respectively to the non-performing loan ratio and made regression analysis,the relationship between the capital profit margin by impulse response function and variance decomposition can see non-performing loans have bigger influence on the capital profit margin,when rising non-performing loans,capital profitability will there is a certain lag,then down and within a certain period according to stable state.Then the summary of this paper.respectively from the perspective of the government,Banks and enterprises on the governance of non-performing loans proposed Suggestions;In terms of improving capital profit rate.Banks should pay attention to optimizing capital structure,strengthening operation and management,strengthening innovation and establishing cooperation mechanism with Internet finance.Finally,the outlook for the future is that the non-performing loan ratio will be in a stable state with the continuous improvement of commercial Banks'operation and management system and the strengthening of government supervision system.