An Empirical Study On Real Estate Loan Risk And Loss Provision Among China's Commercial Banks

Based on the theories of real estate loans,this paper firstly discusses the relationships between the reality industry,commercial banks and loan loss provisions with not only theory carding but also empirical studies.Secondly,by exploring a new model optimized from traditional ones and the latest bank data on both the macro and micro level,utilizing Gaussian Mixture Model,the author discusses the regression influences of China's commercial banks caused by the risks conducted from reality industry in different time periods.Finally,some suggestions on risk control for China's banks and government are proposed base on the conclusions of this paper.The main points of this paper can be summarized as follows:1.This paper confirmed the risks caused by real estate loans and testified that China's commercial banks have effectively controlled the risks by utilizing loan loss provisions.2.By introducing the Basel ? Agreement and the dynamic provision system,China Banking Regulatory Commission proposed a counter-cyclical policy.However,practical implementation of this policy is still on a long way to go.We found in both our micro data section and macro data section that commercial banks in China cannot accrue enough loan loss provisions when their credit scale and net profit increase.Therefore,pro-cyclicality still exists in the operation of China's commercial banks.3.Based on the empirical study of the provincial panel data from 2011 to 2015,we found a positive relationship between the provision of the banks and real estate performance.This result indicates that the counter-cyclical policy indeed influenced the risk control strategy of China's commercial banks on the aspect of managing the risks of real estate loans.