Empirical Study On The Vulnerability Of China's Large State-owned Commercial Banks

In early 2007, a number of large well-known international banks have suffered huge losses in varying degrees because of the U.S. subprime mortgage crisis. Besides, a lot of famous mortgage companies and financial institutions even faced the threat of bankruptcy.With the deepening of financial liberalization, bank's risk will transmit from one country to another through the international transmission mechanism. As a dominant leader, China's large state-owned commercial banks, their ability of identifying, preventing and controlling financial risks is very important to the stability of the whole banking and financial systems. In this context, studying the vulnerability of our current state-owned commercial banks, discovering and solving problems have a great practical significance.Combining the method of qualitative analysis and quantitative research, this paper gives a reasonable empirical studay on the vulnerability of China's large state-owned commercial banks. This paper firstly selects four core indicators to judge the vulnerability of China's large state-owned commercial banks from 1985 to 2008, which gives us the overall trend from increasing to decreasing, then by Granger causality tests and Co-integration analysis, it confirms that some macroeconomic and financial indicators are certainly causes of the vulnerability. In the end, it gives some professional suggestions from macro and micro levels, including creating a favorable macroeconomic environment, strengthening the financial infrastructure, deepening the property reform of banks, establishing a scientific evaluation of vulnerability and risk warning mechanism, as well as broadening financing channels, in order to increase profit models of state-owned commercial banks.