The Study Of The Impact Of Related Lending On Bank Performance Of City Commercial Bank In China

As an important part of China’s banking industry, in the process of development of city commercial banks, related lending has been the subject of attention. Enterprises which share or hold city commercial banks can obtain funds from related lending and other improper means, for example, Chengdu Commercial Bank lending cases related to shareholders in2004. By studying the effects of related lending to bank performance, On the one hand, it can enrich the domestic research on issues associated with related lending, on the other hand, it provides a reference about how to improve the performance of city commercial bank. Therefore, this paper has certain theoretical and practical significance.This paper collects114sets of data on nineteen banks from2007to2012. In empirical research, the samples are divided into two groups, the group of big banks and the group of small banks. For each group, we build a regression model for bank performance associated with related lending. According to the regression result of the big one, the relationship between related lending and ROA shows an inverted "U" shaped distribution. Because " information effect" can play an important role in related lending, and on the other hand, the controlling shareholder can obtain improper benefits through related lending. The interaction of these two effects contributes to this distribution. According to the regression result of the small one, related lending ratio is positively correlated with ROA. It indicates that " information effect" has played a very important role in related lending, which enhances the bank’s performance.