Evaluation Of Covid-19 On Non-Performing Loans Of Banks In China

Since the outbreak of the Covid-19 in 2020,the development of many industries has been affected.Due to the epidemic,enterprises should be shutdown,resulting in the failure of normal capital turnover and the failure to repay bank loans on time.This has also caused banks fail to recover their loans and weakened their liquidity.If many large enterprises fail to repay on time,the non-performing loan rate will be too high,which may even lead to bank bankruptcy and affect the overall financial industry.With the normalization of the epidemic,various industries still face the possibility of shutdown at any time.By evaluating the impact of the epidemic on bank non-performing loans,this paper puts forward reasonable suggestions to help banks prevent the sharp increase of non-performing loans,control risks,and ensure the smooth operation of social economy.This study selects the non-performing loan ratios of 10 provinces and cities with more than 1,000 confirmed cases of the Covid-19 from the first quarter of 2019 to the third quarter of 2021,and uses relevant indicators to measure the macroeconomic to evaluate the impact of the epidemic on bank non-performing loans.Using PMI index,the total retail sales of consumer goods,and social financing scale as explanatory variables,GDP,M2 growth rate,and the RMB weighted average interest rate of financial institutions as control variables,set panel data model,collect relevant data and use Stata software for processing.In addition,the Covid-19 increased rate of confirmed cases was used as an interaction item to analyze the significance of specific variables to the non-performing loan ratio of banks,and to explain the effect of the Covid-19 on explanatory variables.For testing the results,the robustness test is given at the end of the analyses.After empirical research,the epidemic does have an impact on banks’ non-performing loans,but there is a certain lag;Through the indirect impact of macroeconomic indicators on the bank’s non-performing loan ratio,we can positively adjust the impact of non-manufacturing PMI index and the scale of social financing on the non-performing loan ratio of banks,and negatively adjust the impact of the total retail sales of social consumer goods;As the government plays a regulatory role in the macro-economy,the impact of the epidemic on banks’ non-performing loans is temporary and controllable.Although many scholars have conducted research on the impact of infectious diseases and the influencing factors of non-performing loans,the research on the Covid-19,and the impact of the epidemic on banks’ non-performing loans are relatively due to the short time of occurrence and the relatively unpopular research direction.The research conclusions of this paper illustrate the impact of the epidemic on banks’ non-performing loans,and puts forward relevant suggestions,such as the government should maintain a state of epidemic prevention,conduct real-time monitoring and prevention of the progress of the epidemic,continue to pay attention to the impact of the epidemic on various aspects,and provide policy support.For the relevant policies issued by the government,banks should also provide support as soon as possible with their own situation,adjust development strategies,actively transform,enhance the ability of risk prevention and control,and promote the smooth operation of social economy.