Excessive Competition Behavior In The Wealth Management Products Market And Bank Risk Exposure

With the continuous advancement of the marketization process of China's deposit and loan interest rates,the competition in the banking industry has become increasingly fierce.Commercial banks' competition modes have shifted from traditional institutions' expansion to price competition.On the other hand,since 2005,commercial banks have competed.The issuance of wealth management products and the scale of wealth management products continued to expand.The homogenization of competition means forcing commercial banks to compete the rate of return so that the actual rate of return exceeds the normal price,which is likely to lead to excessive competition behavior in the wealth management products market.At the same time,in recent years,the bank's wealth management products “rigid redemption” incidents and expired defaults have appeared many times.For example,at the end of 2012,Hua Xia Bank Shanghai Branch broke the zero-default record of wealth management products and the construction bank and CITIC Bank successively had financial product default incidents.This has led the academic communities to pay attention to the relationship between excessive competition behavior and the bank's own risk in the wealth management products market.First of all,this paper defines the core concept.Secondly,the auction model is used to analyze the generation process of bank's excessive competition behavior and risk transmission channel analysis shows that the continuous improvement of the wealth management product yield.That is,the bank's excessive competition behavior will lead to the transmission of various risks into the bank,which will aggravate the bank's risk exposure.Next,using typical facts,from the perspective of low market concentration,product yields exceeding normal pricing,long-term existence of inversions and serious short-term products,the overall situation of excessive competition behavior in wealth management products market is explained.Further,this paper applies the micro data of wealth management products issued by the commercial bank from 2010 to 2017 according to the Wind database,whether it will increase the product's income level according to market competition factors,or whether there is competition from the market based on the pricing of the underlying assets.The premium determined by the factor is used to test the excessive competition of banks.The judgment results show that the excessive competition behavior of the financial products market of various commercial banks frequently appears and the convergence is strong.Finally,this paper uses the dynamic panel model to deal with endogenous problems caused by dynamic panel data and conduct robustness tests.The empirical results show that the excessive competition behavior of commercial banks in the financial products market has a positive impact on bank risk exposure.The excessive competition behavior of banks has aggravated the risks of banks.The scale of commercial bank wealth management products has no significant impact on bank risk exposure,while commercial banks manage financial resources.The scale of product issuance strengthens the positive impact of excessive competition of commercial banks' wealth management products on bank risk exposure,indicating that commercial banks sell wealth management products in an excessively competitive manner.The larger are the scale of wealth management products,the higher the risk exposure of banks.So banks should attract funds in a reasonably competitive manner.The “No.8 Document” has a limited policy adjustment effect on the bank's excessive competition and bank risk taking and cannot completely release the positive impact of excessive bank competition on bank risk exposure.The impact of excessive bank competition on the risk-taking of joint-stock banks and city commercial banks is much higher than that of state-owned banks,but the risk-taking of state-owned banks cannot be ignored,and the heterogeneity of the scale-up of wealth management products and the adjustment effect of “No.8 Document” is equally obvious.Based on theoretical analysis and empirical test results,specific policy recommendations are as follows.(1)Improving brand building,improving the level of wealth managing products and services,reducing transaction costs to avoid excessive competition.(2)Cutting off risk transmission channels and supervising the operation of wealth management products.(3)Steadily promoting the market-oriented reform of real deposit interest rates,allowing funds to be diverted from the wealth management products market to the traditional deposit market.