Study On Reputation Risk Effect Of Operational Risk Events Of Commercial Banks In China

The reputation risk of commercial banks and their management are of great significance to the stability of financial system.Previous studies have shown that even the operational risk events with small loss can greatly improve the reputation risk of commercial banks,and then induce systemic financial risk.In China's financial system with state-owned commercial banks as the main body,the reputation risk effect and determinants of operational risk events of commercial banks are the core issues of this paper.In theory,the negative signals of operational risk events will lead to a certain negative market reaction and generate reputation risk through investors in the capital market.The existing literature shows that different types of operational risk events have different reputation risks.Therefore,this paper subdivides the operational risks.According to the types of operational risk events and business lines,the classification method aims to investigate the impact of the general attributes of operational risk events on reputation risks,and the impact on the types of commercial banks(state-owned banks and non-state-owned banks)and whether executives are involved The classification of operator's operational risk events identifies the effect of the special attributes of operational risk events on reputation risk in the context of China's financial system.In this paper,201 operational risk events publicly disclosed by Chinese listed banks from January 2001 to March 2019 are taken as samples.Based on the event study method,the revised cumulative abnormal rate of return is used to measure reputation risk.The study shows that in addition to the reputation risk effect(based on general operational risk classification)of operational risk events similar to that of mature economies,in addition to In China's banking system,due to the risk sharing mechanism of national reputation,compared with non-state-owned joint-stock banks,the reputation risk of operational risk events of state-owned banks is lower andrecovery is faster;the operational risk events involving senior executives cause greater reputation loss of commercial banks.In addition,this paper further identifies and tests the determinants of reputation risk in commercial banks after operational risk events.The results show that,when the operational risk event occurs,although the state-owned banks are more vulnerable to reputation damage than the non-state-owned banks,the state-owned reputation has an obvious inhibition effect on the reputation risk of the state-owned banks after the operational risk event,and this kind of risk inhibition effect forms a “substitution effect” with the tangible capital of commercial banks.The policy implication of the research results is that in the financial system with state-owned banks as the main body,the focus of reputation risk supervision and governance of operational risk events lies in non-state-owned joint-stock banks and senior executives.Improving the supervision of tangible economic capital can enhance the inhibition of reputation risk.