Empirical Analysis Of The Influence Factors Of Non-Performing Loan Ratio In Chinese Banking

Banks are the core center to the economy, so the development of the banks will have a deep infect on the economy. There are many indicators that can give a standard to the bank development. But in this article we choose the rate of the non performing loans as the standard to evaluate the risks that a bank meets. We can find the factors that have an impact on the rate of NPL, and also make some suggestions for the banks to manage their loan risks.At first we make an explanation for the word NLP, also we bring the theories and methods to deal with the NPL rate of the banks. This article research the rate of NPL from the macro and micro. The variables are growth rate of gross domestic product, the money supply and the basic RATE in macro, and provision for coverage, the last year’s provision for coverage, the ten biggest customer loan rate, net interest margin, the total assets of one bank, the total amount of the loan, the total amount of the NPL, loan to deposit ratio, the last year’s NPL in micro.We use the macro variables for the whole bank industry first, then we use the whole 10 variables for NLP rate of the 16 listed commercial banks on the method of Principal component.We find that RATE has positive influence to the NPL rate to the whole bank industry, and the level of RATE make a deeper impression on Chinese banks, so we should try to manage the risks of the RATE fluctuations. The rate of the gross domestic product has a negative influence on the NPL rate.So that when the GDP grows faster, the rate of the NPL will be lower. The M2 has a positive infection on the whole industry. Provision for coverage is positive to the NPL rate, also the ten biggest customer loan rate is negative to the NPL rate. Each bank has its own situation, so the 10 factors in micro have different influence on each bank. Therefore every bank should make a special management according to its own situation.In the end, we bring up some solutions for the banks which have the NPL problem. They should improve their ability for the risks, and realize the both falling in the rate of NPL, and also they should work hard on the securitization, and should make a change for the changes of the government policy and the economic situation.