Research Of Mechanism Which Bank Concentration Works On Bank Stability

As China’s economic growth is entering into the China’s New Normal, economic growth is starting to slow down, the adjustment of economic structure is also speeding up, and the factor which supports China’s economy development is undergoing profound changes. At the same time, the Internet Finance grows quickly, direct finance is expansion and the reformation of interest rates liberalization is further promoted. All these which has mentioned before had put a great deal of pressure and challenges on banks, which also gives policy makers and bank regulators as well as the banking institutions a new issue to research. The issue is how to deal with the relationship among bank concentration, bank performance and bank stability. By studying the mechanism which bank concentration works on bank risks.This paper studies the mechanism which the bank concentration works on bank concentration by the qualitative and quantitative methods. This paper illustrates the basic concepts and theories related to bank concentration, bank performance and bank stability by sorting out the relevant literature from qualitative aspects. At the same time this paper also illustrates the mechanism which the bank concentration works on bank concentration by qualitative method. For quantitative aspects, this paper has established empirical analysis model, selected 17 banks for sample and collected several relevant data. Then this paper has got the current situation of bank concentration, bank performance and bank stability and the mechanism which the bank concentration works on bank concentration by descriptive statistics and empirical analysis.This paper has been divided into three parts. The paper has sorted out the literature and theory which include the concept of bank concentration, bank performance and bank stability firstly. Secondly, the article has reflected the bank concentration, bank performance and bank stability by selecting samples and collecting relevant data from the year of 2004 to 2013.Then the article has got the conclusion that the concentration is declining and bank performance and bank stability are improving. Then the article has analyzed the relationship between bank concentration and stability, the relationship between bank concentration and performance and the mechanism which bank concentration works on bank concentration. The paper also has got the conclusion that the improving of China’s commercial banks concentration will help to enhance bank stability and bank concentration affects the bank stability by working on bank performance under the background of current micro-macro environment. Finally, the paper has put forward some measures to improve performance and stability of commercial banks based on conclusion which has mentioned before, such as encouraging mergers andacquisitions, improving concentration; The government should make a innovation on stated-owned capital running in bank industry to improving bank concentration based on efficiency improving of stated-owned banks. Local governments should reduce intervention on local banks which is good for promoting inter-regional mergers and consolidation and improving stability and performance of commercial banks.