Research On The Influence Of Diversification On The Stability Of City Commercial Banks

With the speeding up of the interest rate liberalization, financial disintermediation and financial innovation, the city commercial banks in China under restriction of regional management, financial strength and talent reserves, facing unprecedented development challenges. The city commercial bank is an important financial strength of local services. How to keep steady and sustainable development become the focus of attention from all circles. As the breakthrough of going concern, diversification includes geographical diversification (cross regional business) and multi-business diversification. But these two kinds of means are able to improve the city commercial banks'operating stability, there are still many disputes. This paper constructs the robust index system of city commercial banks to study the stability of 48 city commercial banks in recent years referring to related robustness evaluation indicators. We use panel regression model to analyze the influence of two kinds of means on the stability of the city commercial banks, and put forward some relevant suggestions.The conclusions of this paper are as follows:(1) The geographic diversification can significantly improve the stability of the city commercial banks, but after considering the factor of the asset size, the effect will be reduced, but the result is not significant. (2) To carry out multi-business diversification will significantly reduce the robustness of the city commercial banks, but the larger the size of asset, the smaller the negative impact of multiple operations on robustness. We think under the premise that the cross regional business has not been permitted, the city commercial banks can develop the Internet banking business to achieve cross regional business network channels. In addition, large city commercial banks can carry out diversified operation to broaden the profit channel, but must improve the level of risk management, to prevent the decline in the level of stability. Based on the above outlook, research in this paper is only in a relatively early stage, many studies point can be expanded in future studies, this research provides some clues for us and these researchers. Hope that the results of this study can make some real contribution to our country's banking sector.