The Impact Of Diversification Of Asset Business On The Operational Risks Of Commercial Banks In China

With the acceleration of interest rate marketization and the deepening of financial market reform,financial integration has been developing in a deeper level in recent years.With the increasing supervision of the industry and the widespread phenomenon of "financial disintermediation",the traditional profit model of commercial banks which rely heavily on deposit and loan business is challenged.For a long time,commercial banks,as credit intermediaries,have played a leading role in China's financial market.Although this situation will not change in the future,their traditional business positioning and profit pattern have changed greatly.In the face of the broken interest pattern,the banking industry must start from itself,adapt to the changing economic environment,and actively explore the development strategy of diversification so as to enrich the source of profit.In this trend,major commercial banks have re-positioned their business to meet the needs of different customers with innovative personalized products,to ease the pressure of traditional loan business by diversifying asset business,to reduce dependence on loan business,and to optimize asset allocation structure.Diversification has attracted wide attention from academia in recent years.It is a hot topic in financial research both at home and abroad.With the expansion of business types and business areas,the management difficulty of commercial banks has been increasing,and the internal risks of different types of business have great differences.Different types of commercial banks have different levels of crisis response and management risks,so their impact on the operational risks of banks is uncertain.At present,there is no definite conclusion as to whether commercial banks should actively carry out diversified business,and the theoretical research on the performance differences of diversified business is still not deep enough.Starting from the balance sheet,combined with the portfolio theory,this paper explores the relationship between asset diversification and operational risk by combining qualitative and quantitative methods.As a pioneer of asset diversification in China's commercial banks,joint-stock commercial banks have been keeping positive enthusiasm for innovation and actively developing non-traditional assets business.Their diversification level is higher than that of large commercial banks and city commercial banks.Therefore,this paper takes the joint-stock commercial banks as the research sample and uses the PSTR model for empirical analysis.This paper is divided into five parts.In the first chapter,the introduction mainly introduces the background and significance of this study,summarizes and analyses the existing domestic and foreign related research literature and achievements,and briefly introduces the structure,innovation and shortcomings of the article.The second chapter elaborates the theoretical part of the article,defines the concept of the research object,elaborates the relevant theoretical basis of diversification of bank assets business,and according to this theory,analyses the impact of diversification of commercial bank assets business on operational risk.The third chapter mainly describes the reasons for the diversification of asset business of commercial banks in China,and compares the diversification performance of different types of commercial banks,so as to identify the joint-stock commercial banks as the empirical research object of this paper.The fourth chapter is empirical analysis.Taking 11 joint-stock commercial banks as research samples,this paper establishes a panel smoothing transformation regression model by sorting out the financial data of 2007-2018,and analyses the impact of diversification of asset business on its operational risk.The fifth chapter is the conclusions and suggestions of the study.It summarizes the conelusions of empirical analysis and the basic views of each chapter,and puts forward corresponding policy recommendations for the diversification of asset business of commercial banks in China.The empirical results of this paper show that the diversification of asset business will reduce the operational risk of joint-stock commercial banks as a whole.There is a non-linear relationship between the two.To improve the diversification level in a certain range will help to disperse the operational risk.But the conversion function shows that when the level of diversification exceeds a certain level,its ability to reduce risk will be greatly weakened.That is to say,the degree of diversification of asset business is not the higher the better,but excessive diversification will have a negative impact on business risk.Therefore,this paper suggests that China's commercial banks should properly promote the diversification of asset business,concentrate resources on comparative advantage areas;increase the management of financial investment assets,pay attention to risk prevention and avoidance;do a good job in risk prevention and control,establish internal firewall system to monitor business diversification;improve the banking governance mechanism,reduce diversified principal-agent problems.