| As we all know, Commercial bank is the core of credit market and plays a vital role in indirect financing. The release of credit funds are not only associated with the benefit and risk of the commercial banks themselves, but also the development of the social economy. Furthermore, the coordinated development of regional economy and conversion of industry are also influenced by the credit funds. Since the establishment of commercial bank, the loan concentration phenomenon has been always related to the commercial banks, especially for the City Commercial Banks, which is transformed from City Credit Cooperatives.China’s economy has been in rapid growth over the past 30 years. The loan concentration is helpful to support the development of major projects and areas to some extent and drives the growth of the economy in China, which makes the loan concentration problems did not get enough attention. At present, China is at the key moment that the economic structure is transforming and upgrading. Thus, the macro economy environment is no longer the same as before, so that commercial banks have to adapt the great changes in the market as soon as possible. With the formal implementation of deposit insurance system, access threshold of private capital has been reduced and five private banks have been approved to be the pilots. Besides, financial innovation and internet finance have been developed in recent years. All these factors have a great impact on the development of the traditional banking business and lead the banking industry to facing more fierce and brutal struggle to survive in the future.In the situation that the risk exposure is increased and market competition is fierce, City Commercial Banks are restricted by lack of capital, the limitation of innovation, imperfection of management, etc., so that City Commercial Banks fall behind of the large-scale commercial banks and joint-stock commercial banks in the transitional process. Especially, City Commercial Banks lag far behind of the large-scale commercial banks and joint-stock commercial banks in building risk management system, establish risk management institution, mastering risk management techniques and cultivate talents for risk management.At present, most scholars study the loan concentration phenomenon using the data of 16 listed commercial banks, because these data are easy to collect. Some scholars study the industry which bank loans are invested to. In this paper, we just study loan concentration based on City Commercial Banks, use a combination of theoretical and empirical methods. We use CHD, IHD and GHD to measure the degree of concentration of loans, and study the relationship between loan concentration and profits and risks of City Commercial Banks.This thesis analysis the viewpoints of the researchers in this field and draw conclusions on the influence that loan concentration brings on bank benefit and risk. This thesis presents the process of how the City Credit Cooperatives transited into City Cooperative Banks and transformed to City Commercial Banks eventually. The background of the existence of loan concentration of City Commercial Banks is also presented. On the analysis of the general loan situation and loan concentration of City Commercial Banks, the loan concentration ratio has been reduced in these years. However, there still exist great differences among the City Commercial Banks. Then, this thesis explores the causes of the formation of loan concentration problems both in macro and meso point of view.Loan concentration has an impact on the income in the following areas:save the bank transaction costs and regulatory costs, improve the return on assets, reduce the information asymmetry and avoid credit risks. Loan concentration has an influence on the risk of banks in the following areas:increase the bank liquidity risk and financial system risk, reduce the efficiency of application of funds, reduce the profits of banks and limit the industrial structural transformation and regional economy development.The emphasis of this thesis is placed on the quantitative research of the loan concentration. Annual reports from 2008 to 2014 of 110 City Commercial Banks have been collected. Finally, on the consideration of data availability and data integrity, annual reports from 2008 to 2014 of 44 City Commercial Banks was chosen for further studies. Exposure ratios method was adopted to calculate the loan customer concentration ratio and the Herfindahl-Hirschman Index method was adopted to calculate the industry concentration ratio and area concentration ratio. These three parameters were chosen as independent variable to represent loan concentration. Return on assets and return on shareholders’ equity were chosen to evaluate the profit of the banks. Bad Loan Ratio, capital adequacy ratio and provision coverage ratio were chosen to evaluate the risk of the banks. Excel and Stata12.0 were used to analysis these data and some conclusions are drawn as follows.(1)From the profit of City Commercial Banks’ point of view, customer concentration has a negative correlated influence on the ROA and ROE. Thus, the increase of customer concentration cannot bring benefit to the City Commercial Banks. On the contrary, area concentration has a positive correlated influence on the benefit of City Commercial Banks. Therefore, the banks can benefit to some extent if the credit funds are put into the concentrated areas. The industry concentration does not show obvious relations with the profit of City Commercial Banks.(2)From the risk of City Commercial Banks’ point of view, customer concentration have positive, negative and negative correlated influence on Bad Loan Ratio, capital adequacy ratio and provision coverage ratio, respectively. Therefore, the increase of customer concentration ratio will increase the non-performing loan ratio, reduce capital adequacy ratio and provision coverage ratio at the same time. As a result, City Commercial Banks will encounter more risks and the ability to resist risks is damaged. The increase of industry concentration ratio will bring risks to the City Commercial Banks. The area concentration ratio does not show obvious relations with the risk of City Commercial Banks.On the basis of the demonstration and research conclusions, some strategies and advice are presented as follows:(1)Supervision organizations are supposed to strengthen supervision on the risks that loan concentrations bring about.(2)The City Commercial Banks are supposed to optimize the credit management method.(3)It is vital to push for the financial environment development. |
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