Research On The Impact Of Deposit Competition On Bank Systemic Risk

As the core of the whole financial industry,the stability of banking industry is related to the healthy and stable development of a country’s economy.In the 1970 s,with the rise of financial liberalization reform,the application of financial deepening theory in developing countries has gradually expanded,and the competition in banking market has become increasingly fierce.At the same time,after the reform of financial liberalization,the bankruptcy of many countries gives us a profound warning.When exploring the root causes of bankruptcy,scholars at home and abroad once believed that deposit competition was the source of destroying the overall stability of banks.With the deepening of research,different views emerged,and more and more scholars.It is considered that moderate deposit competition is conducive to reducing bank risk.The above two views are different,but there is no doubt that the competition of deposits is indeed related to the overall security of the banking industry.Therefore,in the changing new environment,we should renew the cognitive relationship between the competition of deposits and the risk of banks,promote the effective guidance of various departments to the competition of bank deposits,and establish a reasonable and orderly competition environment.Maintaining the stability of the banking system is of great significance.This paper mainly studies the relationship between deposit competition and systemic risk of banks from two aspects: related theory and empirical test.On the basis of the theory of deposit competition and bank stability,this paper firstly analyses the research status at home and abroad,including deposit competition,systemic risk of banks and the impact mechanism of deposit competition on bank risk-taking.It is found that the existing studies mainly focus on "competition-stability",which is represented by Keeley’s(1990)hypothesis of bank franchise value effect,Martinez-Mira’s and Repullo’s(2010)profit margin effect and Boyd and De Nicolo’s(2005)risk transfer effect.In the empirical part,this paper selects the panel data of 14 listed commercial banks in China from 2008 to 2017,uses Jimenez et al(2013)for reference,and uses the redefined Lerner to explain the index clearly,how authoritative is it,theoretical analysis gives a detailed account of the index and introduces why this index is chosen.The index measures the deposit competition of commercial banks,uses conditional value at risk(CoVaR)method to measure the systemic risk of listed commercial banks,and uses feasible generalized least squares method(FGLS)to empirically analyze the current effect and lag effect of deposit competition on the systemic risk of commercial banks.The empirical results are as follows:(1)There is a linear relationship between deposit competition and bank systemic risk in the current effect.Under the influence of "risk transfer effect",deposit competition reduces the systemic risk of banks,so maintaining the appropriate degree of bank deposit competition is conducive to maintaining the stability of banks.(2)In the first-stage lag effect,there is no lag effect in the wireless relationship between deposit competition and bank systemic risk.Finally,based on the current economic development background of our country and the empirical research results of this paper,the corresponding,reasonable and operable policy recommendations are put forward.