Research On The Influence Of Diversification On The Operation Risk Of PingAn Bank

Diversification is an enterprise development strategy in which an enterprise operates two or more products or services at the same time.With the continuous development of the capital market,the deepening of financial disintermediation and the increasing degree of competition in the financial market,many commercial banks at home and abroad have taken the road of diversification in order to reduce their operating risks and enhance their competitive advantages.However,the academic circle has not reached a unified conclusion on the impact of diversification on the operational risk of commercial banks,resulting in the limited reference value of relevant research on individual banks.Therefore,this thesis chooses Ping An Bank,which is representative in the aspect of diversification,as the research object to analyze the impact of diversification on its operational risk.After defining the business risk discussed in this thesis,combined with relevant theoretical analysis,this thesis puts forward three research hypotheses.In order to lay the research foundation,this thesis firstly introduces the current situation of Ping An Bank’s diversified operation,and analyzes the motivation and existing problems of its diversified operation.The results show that the growth pressure of interest income,the narrowing of net interest margin,the unbalanced growth of deposits and loans,the pressure of capital demand,the major change of customer demand,the deepening of financial disintermediation and the fierce market competition are the important factors to promote the diversification transformation of Ping An Bank.However,at present,Ping An Bank still faces the problems that its diversified operation relies heavily on net interest income,the growth of non-interest net income slows down,and the sources of non-interest net income are excessively concentrated on homogeneous businesses.These problems may lead to the lack of growth impetus for the future development of Ping An Bank and more risks.After that,this thesis makes a comparative analysis and evaluation of the operating risks of Ping An Bank from three levels: risk resistance capacity,risk level and bankruptcy risk.It finds that Ping An Bank has good risk resilience and low risk level,and the bankruptcy risk is easy to rise when the external impact is large,but it is generally controllable.The comparative analysis of Postal Savings Bank and Industrial Bank,which are significantly different from Ping An Bank in terms of degree of diversification,shows that Postal Savings Bank with low degree of diversification has a weaker risk resistance than Ping An Bank and Industrial Bank on the whole,but its risk level is lower and its bankruptcy risk is less affected by external shocks.On the basis of understanding the operation and risk status of Ping An Bank,in order to test the proposed research hypothesis,this thesis takes the Herfindahl-Hirschman index as the basis to measure the diversification level of Ping An Bank,and takes the non-performing loan ratio,net interest margin and total asset growth rate as control variables.The standard deviation of revenue growth rate,standard deviation of return on total assets,and the reciprocal value of bank bankruptcy probability—Z value were selected as the explained variables to measure the operating risk of Ping An Bank from three levels,namely risk resistance capacity,risk level,and overall operating risk,namely risk resistance capacity under a certain risk level.Three multiple regression models were established to analyze the model results and conduct relevant tests.Finally,based on the above research and analysis results,this thesis puts forward specific suggestions for Ping An Bank to maintain the stable development of traditional business,strengthen risk prevention and control,expand non-interest business and optimize the structure of non-interest income.The main conclusions of this thesis are as follows:The main conclusions of this thesis are as follows:1.Diversification has no significant impact on the income growth stability of Ping An Bank,which cannot improve or weaken the ability of income to resist external risk shocks.This may be due to the unfixed relationship between the ratio of the growth rate volatility of non-interest net income and interest net income and their correlation coefficients.2.Diversification can significantly enhance the stability of Ping An Bank’s profitability and reduce its risk level.This may be because Ping An Bank’s interest business is depressed and its profit level of net interest income declines.Slow growth will lead to an increase in the proportion of non-interest net income with strong profitability,so as to partially hedge the negative effect of declining profitability of interest net income and stabilize the profitability of Ping An Bank.3.Diversification can significantly reduce the bankruptcy risk and overall operating risk of Ping An Bank.This is related to the strong profitability of non-interest income and the diversification can reduce the volatility of profitability.