The Influence Of Bank Loan Price Competition On Risk-Taking Under The Interest Rate Marketization

As the most important financial institution in China's financial industry,commercial banks' stability is related to the stability of China's entire financial system and even the national economy.Commercial bank risk-taking refers to the business behavior in which the bank chooses to take risks or conduct venture investment in pursuit of profit maximization in the course of business operation;it includes both the risk that the bank takes the initiative and the passive risk selection.With the adjustment of China's bank entry threshold,the reform of the banking system and the gradual completion of the interest rate marketization reform,the competition pattern of China's banking industry has undergone tremendous changes and competition has become increasingly fierce.Under such circumstances,the bank's risk behavior is increasingly difficult to predict and supervise,which poses challenges to the stable operation of banks and the effective supervision of regulators.Therefore,under the background of interest rate marketization reform,the paper discusses the impact of China's commercial bank loan price competition on risk exposure.On the one hand,it can deepen the understanding of maintaining the stability of the banking system under the new situation;To manage and prevent operational risks,it is useful for regulators to guide and regulate effective competition among banks.This paper first studies the bank loan competition and risk-taking from the theoretical point of view,and analyzes the impact mechanism of bank loan price competition on its risk-taking and the current situation of bank loan price competition and risk-taking in China under the background of interest rate marketization.On the basis of theoretical research,the two-stage market competition theory model of three market entities is established to analyze the relationship between bank loan competition and risk-taking.At the same time,panel data of 32 commercial banks in China are selected in 2007-2018 to establish regression.The model uses fixed-effects regression analysis to analyze the following issues: First,what is the relationship between commercial bank loan price competition and risk-taking,how does bank loan price competition affect its risk-bearing during the sample period;How interest rate liberalization affects the relationship between bank loan price competition and risk taking;Third,for different types of commercial banks,the impact of increased loan price competition on their risk exposure is different.This paper finds that during the research period,China's commercial bank loan price competition first declined and then increased;it showed a downward trend between 2007 and 2013,and an upward trend between 2014 and 2018.Bank price competition and risk-taking behavior showed a significant �U�-type relationship;during the sample period,the intensification of competition stimulated the bank's risk behavior.The bank price competition and the overall business risk assumed by the bank also showed a significant �U� relationship.During the sample period,fierce competition was conducive to reducing the overall business risk of the bank.Interest rate liberalization has a significant impact on the relationship between bank loan competition and risk-taking in China.In different stages of interest rate liberalization reform,bank loan competition has different impacts on risk exposure.Compared with the reform period,after the completion of the reform,the risk behavior of the bank is intensified;however,the completion of the interest rate marketization reform is conducive to reducing the overall operational risk assumed by the bank.The overall sample is divided into state-owned banks,joint-stock banks and city commercial banks for group regression.The results show that the impact of loan price competition on risk exposure is different.The intensification of price competition in the loan market constrained the risk-taking behavior of state-owned commercial banks and city commercial banks.The intensified loan competition stimulated the risk behavior of joint-stock banks,but the result was not significant.At the same time,the paper also found that the intensification of bank loan price competition significantly reduced the overall business risk of urban commercial banks,but the impact on the overall operating risks of state-owned banks and joint-stock banks was not significant.