An Empirical Study On The Influencing Factors Of Non-performing Loans In China's Commercial Banks

With China's economy stepping into the "new normal" of slowing down and improving the quality,financial supply-side structural reform has become a top priority.It is extremely urgent to prevent financial risks under such a serious situation that China's financial supply side structure currently is unreasonable,the proportion of indirect financing is disproportionately high,defaults in indirect financing is frequent and the non-performing loans of Banks increase sharply.Therefore,the study on the causes of non-performing loans is significant both in theoretical and practical level.At present,the academia mainly explores the causes of non-performing loans on macro and micro levels,however,there still do not have a consistent conclusion so far.At the same time,the research samples are not time-limited that cannot fully reflect the current economic situation in China.In addition,researchers usually study the impact of government behavior on band loans from the perspective of fiscal revenue rather than the effects of government expenditure on bad loans.The government expenditure,however,would directly determine the investment of local infrastructure construction which mainly comes from bank loans.Thus,it can be seen that fiscal expenditure could be linked with non-performing loan ratio.Hence,based on the existing research,this paper will comprehensively demonstrate how the factors influence non-performing loans in commercial banks in aspects of economic development level,monetary policy and fiscal policy.At first,this paper will analysis the overall features of non-performing loans,the distribution structure and variation tendency.Then,the influence factors and influencing mechanism on macro level will be explored.Due to different economic development levels of each province,a wide non-performing loans gap among each province,fixed effect modal and dynamic panel model will be apply into this paper based on research sample of 31 provinces according to economic data from 2008 to 2017.Next,this paper will explore influence factors onnon-performing loan ratio in commercial banks and its transmission mechanism on micro level.There-into,respectively four state-owned Banks and joint-stock Banks are recognized as the research samples in view of the impact of banks' individual characteristics on non-performing loans.Additionally,financial data of research samples from 2008 to 2017 will be used in this part.Finally,the robustness of the results is tested by replacing the indexes.The results show that :(1)non-performing loans in China are mostly concentrated in industries with low innovation and fierce competition;The non-performing loan ratio of rural commercial Banks and the big four state-owned commercial Banks is higher than that of joint-stock Banks.The distribution structure of non-performing loans has been improved,with the proportion of concern loans increasing year by year and that of loss loans decreasing year by year.(2)the loose monetary policy and commercial Banks non-performing loan ratio were positively correlated,the M2 growth rate is high,on the one hand,can stimulate economic demand,so as to improve business performance,on the other hand also can directly improve the credit growth speed,and rapid credit growth will results in the decrease of bank credit standards,which result in the increase of non-performing loan ratio,this and some scholars research conclusion is different;The ratio of fiscal revenue and expenditure of local governments is positively correlated with the non-performing loan ratio of Banks,that is,the increase of fiscal revenue and the decrease of fiscal expenditure will lead to the increase of non-performing loan ratio.The improvement of the economic development level of each province will reduce the non-performing loan ratio of the bank,while the increase of the ratio of deposit to loan is not conducive to the reduction of the non-performing loan ratio of the bank.The increase of comprehensive loan interest rate will lead to the increase of non-performing loan ratio.(3)Banks with higher risk preference also have higher non-performing loan ratio;The more profitable the bank,the lower the non-performing loan ratio;The less liquid the bank,the higher the non-performing loan ratio.The possible innovations in this paper are mainly reflected in the following two aspects :(1)innovation in the research perspective.Considering that both fiscal revenue and expenditure of local governments will have an impact on non-performing loans of commercial Banks,this paper constructs a new proxyindicator--government revenue and expenditure ratio,and explores the causes of non-performing loans from the perspective of the relationship between the government,Banks and enterprises.(2)research model innovation.Through theoretical analysis found that commercial Banks non-performing loans related to the case,then on the basis of static panel data model,join the lag issue of non-performing loan ratio as the instrumental variable to construct the dynamic panel data model,combining with the OLS regression and generalized moment estimation model(GMM)comparative study of the two methods,the cause of formation of non-performing loans.