Study On The Influence Of Capital Structure On The Risk Of Commercial Banks In China

Capital regulation is the focus of the commercial bank regulation. Rational capital structure is not only the embodiment of the supplement efficiency of funds, Banks are decided against and the ability to resist risk, also the embodiment of the capability in shielding against risks. With the constant improvement of system of commercial Banks, the capital structure of Chinese commercial Banks have happened more changes. Although most scholars believe that the capital structure has an impact on bank’s risk level, we don’t know that the capital structure influence risk in what ways and through what path. These are questions we need to be addressed. The solution of these problems is beneficial to optimizing capital structure from the view of risk control, help us to maximize the market value of banks. So they make the commercial Banks have a competitive edge in the fierce competition, and achieve their own long-term development goal.This paper firstly analyzes the transmission mechanism of the impact about capital structure on the risk in commercial banks, and the relationship between the capital structure and the risk on the basis of the theoretical analysis. Following, choosing nine indicators about the equity concentration, the nature of the equity, and the liquidity of the equity measures the capital structure. And the banks risk is measured mainly from two aspects about the management risk and financial risk, on this basis, using factor analysis method calculate the composite score of risk factors. Afterwards, the descriptive statistical analyzes the relationship between the capital structure and the risk. The results show that capital structure is correlated with the banks’ financial risk and the management risk, to be important, the financing structure has significant correlation with the financial risks. On the basis of the descriptive statistical analysis, through, the random effects model of the panel regression analyzes the influence of banks’ capital structure for the risk through the calculation of the comprehensive risk factor score to measure the bank risk. The conclusions are drawn as follows: financing structure, ownership structure and debt structure of banks impact on the risk. Specifically, financing structure has significant positive influence; equity structure’s effect is not significant; the debt structure has a greater influence on risk. There are several main reasons. The high asset-liability ratio causes bank financial leverage bigger, creating greater financial risk. And equity structure causes the shareholder risk behavior changing mainly through the influence of the imbalance equity incentive and constraint to shareholders, but this kind of behavior change does not have uniform rules, mainly depending on the comprehensive influence factors of the shareholders’personal qualities, risk preference and market expectations and other factors, leading to the influence of equity structure is not stable. Because the generalized capital structure of the paper includes short-term debt, the influence of debt structure is shown that short-debt capital and long-term debt capital have no reasonable term matching, as a result, this phenomenon cause banks risk promoting, furthermore, the more short-term debts are easy to improve the liquidity risk of banks in China. In the last section of this paper, the according recommendations of three aspects about improving the financing structure, optimizing the equity structure, and improving the debt structure are proposed.