The Analysis Of Impacts Of Regional Marketization On Bank Stability

China's market-oriented reform has been making great achievement during 40 years of evolution and development,but the level of regional marketization is quite different.China is a financial market dominated by indirect finance,so the stability of the banking system attaches great significance to the national economy.Regional marketization has an impact on the stability of banking system,so it is necessary to study how regional marketization influence on stability of the bank.Based on the study,we have a better understand of differences between various regions,and take actions to enhance bank's competitiveness in a competitive modern society.This paper conducts empirical analysis on the samples of 108 urban commercial banks and rural commercial banks from 2008 to 2017,takes the marketization index as the explanatory variable,and Z-score as the explanatory variable to represent the stability of banks.In addition,the overall sample was classified to verify differences between urban commercial banks and rural commercial banks.The empirical results show that the regional marketization has a positive effect on the stability of banks.Moreover,the positive effect of regional marketization based on urban commercial banks is more significant,mainly because the bigger independence of urban banks.The positive effect of regional marketization on bank stability mainly reflected in two aspects.First,the degree of regional marketization improves the market transparency,and the market imposes restrictions on enterprises' behaviors.Second,the regional marketization leads to fierce competition,profit space of banks shrinks.To avoid more non-performing loans,banks have been more cautious in investment,and actively innovating to develop new profit growth points.Based on the study,this paper holds that China should prevent financial risks while promoting the market-oriented reform,improve the living environment of small and medium-sized banks and encourage innovation.At the same time,banks should actively adapt to the environment,make improvements in risk mechanism,product innovation and efficient management,so as to maintain the stability of the system.