Research On The Impact Of Income Diversification Of Commercial Banks On Risk-taking

With the increasing openness of the international financial market,the expansion of the area and subject of financial market,the impact of the basic completion of interest rate liberalization in China,and the financial convenience brought by Internet finance has impacted the traditional operation and profit model of Chinese commercial banks relying on deposit and loan business.In such an operating environment,in order to ensure their own profitability and enhance their competitiveness in the financial market,banks have started the transformation of diversified business models,and their income structure has gradually became richer and more diversified.Meanwhile,commercial banks are an important component of Chinese economic and financial system,which is related to the stable and sustainable development of the entire system.Therefore,in order to maintain the health and stability of Chinese financial market and make the advancement of the diversification strategy more scientific and rational,it is of great practical significance to explore the relationship between income diversification and the risk-taking status of banks.In order to answer a series of related questions,this article studies and combs the existing related literature at first,explains the concept of income diversification of commercial banks,the composition of the income structure and related theories of diversification,and then,further analyses the impact mechanism of diversified income structure on the risk-taking status of banks and the regulatory mechanism of the impact of internal and external factors including the size,equity structure,deposit and loan spreads,and the pressure of capital regulation.In addition,based on theoretical analysis,corresponding hypotheses are proposed.Combined with the data of some listed commercial banks in China from 2008 to 2018,the bankruptcy risk Z-score and diversification indicator DIV were selected as the proxy variables of the main variables involved in this study,and the regression analysis of the panel data model was performed.According to the regression results,the proposed hypothesis are tested,meanwhile,we can explore the relationship between income diversification and bank risk-taking,whether the internal and external factors of the bank have a significant regulatory effect on this relationship,and whether this relationship will vary depending on the type of bank.According to the results of empirical analysis,this paper mainly draws the following conclusions:(1)Diversified income structure can reduce the risk of bankruptcy,increase risk-adjusted return on assets,and improve the risk-taking situation of commercial banks.(2)The size of the bank has no significant positive regulatory effect on the positive relationship between diversification and risk-taking;a high level of deposit and loan spreads is not conducive to the positive effect of income diversification on risk-taking;the stronger the pressure of capital supervision,the greater the weakening of the positive correlation between diversification and bankruptcy risk Z-score,and there even will be a reverse impact.However,the concentration of equity has no significant regulating effect on the correlation between the two.(3)For joint-stock commercial banks and rural commercial banks,income diversification has a significant positive impact on improving the risk-taking situation.This effect is positive and insignificant for city commercial banks,while it shows not significant negative impact on state-owned banks and the absolute value of coefficient is small.According to the enlightenment given by the above research conclusions,this article puts forward specific suggestions on the implementation of the diversification strategy and the enhancement of risk management and control capabilities of commercial banks in combination with the operating environment,the status of income diversification and the types of banks.