Analysis Of The Impact Of Competition On The Leverage Of The Commercial Banks

In recent years,along with the steady growth of economy and the improvement of the financial environment,the scale of assets and liabilities of commercial banks has maintained rapid growth.And the structure of bank assets has taken place significant changes.Under the influence of competition and financial supervision,the growth of non-credit assets accelerated leds to a downward trend in the leverage ratio of commercial banks.However,effectiveness of commercial banks is not only related to the security and stability of the financial system,but also affects the healthy development of the real economy.Therefore,researches on the characteristics and influencing factors of the leverage ratio of commercial banks are very important.It's valuable and significant for promoting the healthy development of the real economy and maintaining financial stability to explore the feasibility path of de-leverage.Although there has been rich literature on the study of the leverage of commercial banks and competition,that focuses on the risks which bring to the financial market.Few documents takes bank competition as the main variable to research the relationship between competition and the leverage of banks.In this paper,we expand the research based on the previous literature results.Firstly,introduce the definition of the leverage ratio of the commercial banks and analyze the characteristics and trend of the leverage ratio according to the statistical data.Then through analyzing the reasons for changes in leverage by assets classification,we get conclusions as follow.First,the proportion of the inter-bank assets and investment assets is limited,but the sum of two proportions is stable.Second,the proportion of non-credit assets of local commercial banks has increased rapidly,what's more,the non-credit assets of a few banks have even exceeded the amount of loans.Secondly,with reference to the research results and methods of scholars,the thesis studies on the relationship between bank competition and leverage of commercial banks.By summarizing the theory and the measurement method of competition,the thesis combines the measurement result of competition to explain the impact mechanism of bank competition on bank leverage.In order to improve the conclusion,the thesis establishes an econometric model with the leverage and influence factors of commercial banks,which concludes that commercial banks of China have significant market competition effects.What's more,all different types of commercial banks have competitive effects.Therefore,the change of bank leverage is not only subject to macroeconomic and monetary policy,but also to the competition of banks,which not only comes from the competition between banks,but also from the external competition between banks and other institutions.In the process of research,this paper explores the related mechanisms between leverage of commercial banks and bank competition.In order to analyze the microchange of the leverage,the assets of the bank are classified as loans,cash,interbank assets investment assets and so on.The asset scale of interbank assets and investment assets has developed rapidly in recent years,which may be an important reason for pushing up bank leverage and off-balance sheet assets.This paper describes bank competition as two indicators of external competition and internal competition of commercial banks.The former is the competition from other financial institutions and online finance,and the latter is the internal competition between banks.However,model results shows that both of bank external competition and internal competition have a significant impact on the level of leverage.Due to the difficulty in obtaining data,the measurement of leverage does not take off-balance sheet assets into account.Although the mechanism of bank competition on bank leverage is proposed,it's necessary to conduct further research.