The Influence Of Government Implicit Guarantee On Commercial Banks’ Risk-taking

Government implicit guarantee is a factor that exists in reality but is often overlooked,playing an important role in the risk-taking of commercial banks in China.In the context of implicit government guarantees,commercial banks will develop a dependence on implicit government guarantees and generate expectations that the government will provide assistance to banks when they face bankruptcy or operational crises.From another perspective,it is precisely due to the existence of implicit government guarantees that commercial banks are more inclined to choose high-risk projects and pursue high profits,thus neglecting their own risk control,which directly leads to problems such as an increase in non-performing loan rates and low operational efficiency.Therefore,in the current financial supervision work,how to effectively prevent systemic risks in the banking system and maintain the stable operation of the banking system has become an important task and also a goal that regulators strive to pursue.This article summarizes the concept and theory of implicit government guarantees and bank risk taking,deeply considers the impact mechanism of implicit government guarantees on commercial bank risk taking in China,and proposes research hypotheses based on this:firstly,implicit government guarantees have a positive incentive effect on commercial bank risk taking;Secondly,implicit government guarantees have a heterogeneous impact on the risk-taking of different types of banks,with a stronger impact on state-owned commercial banks.Banks with larger asset sizes and a higher proportion of non-interest income have a higher level of risk-taking under the background of implicit government guarantees.Based on this,empirical analysis was conducted,selecting annual data from 34 commercial banks from 2007 to 2021,using Stata16 econometric software for analysis.The research subjects covered three major types:state-owned banks,joint-stock banks,and urban commercial banks.Firstly,the Contingent Rights Model(CCA)is used to calculate the implicit guarantee amount of the sample banks.Then,the Generalized Moment Estimation(GMM)dynamic panel is used to empirically investigate the impact of government implicit guarantee on commercial bank risk taking,and the sample banks are divided into three groups to study their heterogeneous impact on commercial bank risk taking.Finally,in order to further explore the reasons for the heterogeneous response of banks with different characteristics to government implicit guarantees,this article selects two indicator variables,namely bank asset size and the proportion of non-interest income,as interaction terms with government implicit guarantees from a micro perspective,and explores the moderating effects of the two on commercial bank risk taking.The empirical results indicate that government implicit guarantees have a positive incentive effect on commercial banks’ risk taking,that is,the amount of government implicit guarantees is highly correlated with the risk scale of banks,and there are differences in their effects on different types of banks.Among the 34 sample banks,6 state-owned banks have a greater amount of implicit guarantees than joint-stock banks and urban commercial banks,with government implicit guarantees having the greatest impact on state-owned banks,The impact on joint-stock banks is secondary,while the impact on the risk bearing level of urban commercial banks is not significant;From a micro perspective,implicit government guarantees have a significant negative impact on commercial banks with larger asset sizes but higher non-interest income ratios;The negative impact on banks with smaller asset sizes and a small proportion of non-interest income is relatively small.Finally,based on the research results,suggestions are proposed to establish and improve the exit mechanism of the banking industry,promote the deepening of bank reform,and improve the deposit insurance system.