A Study On The Closed Periodic Study Of Loan Loss Of Commercial Banks In China

After the outbreak of the financial crisis, the world regulators and academic circles began to reflect on the financial institutions regulatory system, they think the procyclical behavior of financial system is a main reason for the financial crisis. So governments actively to reform the existing financial supervision system, trying to buffer the tool into the reverse cycle in the framework of prudential supervision under the macro. Loan loss provision as an important risk prevention tools, bank is extracted from the income or profits for the future in order to cope with possible loan loss reserve buffer. In theory the bank can confirm in advance that loss, if banks provision more provision in the boom years, it will play the role of risk prevention. But in reality, the loan loss provision is gradually revealing the procyclicality. The main performance is: in the rising period of economic, in the expulsion of high profits, the bank will maintain high loans for efforts to reduce reserves. But in a recession, before the provision of the loan loss provision can not make up for the high loan losses, the bank will significantly enhance the level of provisions for loan losses, caused banks reduced lending profits decline, the periodic fluctuation of economy and finance further amplification. Therefore, dynamic provisioning system draw lessons from foreign experience into the inverse cycle becomes the commercial bank to reduce a realistic choice of cyclical volatility.This paper theoretically summarizes the development process of our country provision system, introduces the implementation of dynamic provisioning system on international, and comparative analysis of various countries on the similarities and differences of the concrete implementation method. This paper respectively from the financial analysis and measurement of angle to our country commercial bank loan loss provision and cycle of the situation. In the aspect of financial analysis, selects the representative of state‐owned banks and joint‐stock banks, through the analysis of the financial index, obtains our country commercial bank loan loss provision and trend characteristics. In the econometric analysis, based on research of foreign scholars, using the panel data of China’s banking industry during 2006‐2013, by using the method of system generalized method of moments estimation, decomposition of provision for loan loss provisions for loan losses, the empirical analysis of determinants of its influence, and verified the pro cyclical features of it. In this paper, the study found, non discretionary part of our country commercial bank loan loss provision for the procyclical feature strong, discretionary part shows the bank with income smoothing operation.