Analysis Of The Factors Affecting Non-performing Loans Of China Construction Bank Y Branch

The development of financial industry in our country relatively lags behind.In the planned economic period,commercial bank in our country is actually owned by the government and mainly deals with payment and settlement transactions without any other mission indicator,which is the root cause of extremely low operating efficiency of the bank,indicating generation and accumulation of bad loans in the future.In recent years,the government has been paying more attention to the problem of the bad loans because it affects financial stability in our country.The development of financial industry in western countries always ranks high in the world.Western countries have started studies on the bad loans from early on and also put forward a lot of theories and research methods of bad loans.In the 1980s,some scholars utilized the mathematical model to study the bad loans.According to the research results,it was recommended that the banking sector and the country's financial sectors should pay attention to factors affecting the bad loans.People usually prefer to the panel data model for studies of the bad loans by analyzing effects of both macro-economic and micro-economic factors on the bad loans.However,our studies on the bad loans suffered by the commercial bank started relatively late,and mainly focus on qualitative researches accompanied with less quantitative analysis.This paper firstly introduces the definition of the bad loans and describes the several stages of evolution of the definition of the bad loans and the five-class classification.Meanwhile,it discusses relevant theories of the bad loans based on former studies.On the theoretical basis,it analyzes the present conditions and the bad loans of China's banking sector and the banking sector in city Y,as well as the causes from different perspectives.There are many factors affecting the bad loans,mainly including macro and micro ones.Based on the actual conditions of city Y,this paper conducts empirical analysis mainly from both macro and micro aspects.In the micro aspect,Probit model is built to carry out empirical analysis based on credit information of city Y Branch,China Construction Bank.From the perspective of the borrower,the relationship between the possibility of the bad loans and the specified micro factors are analyzed.The results show that:the borrower's credit rating and the bad loans have a negative correlation,that is to say,lower credit rating may bring about higher possibility of default and bad loans.The customer unit's economic type and the bad loans have a notable negative correlation.The customer unit's scale and the bad loans have a negative but not notable correlation.In the macro aspect,it focuses on the relationship between the outstanding bad loans suffered by city Y Branch,China Construction Bank and the following five macro factors:fiscal revenue,totalexport-import volume,total fixed asset investment,GDP and total retail sales of consumer goods in city Y.The spass tool is utilized to analyze the relationship among macro factors by means of factor analysis and extract two principal components to study the correlation between the bad loans and the five factors.The results are quite obvious.Finally,suggestions on the bad loans suffered by city Y Branch,China Construction Bank are put forward from prevention and processing of the bad loans based on the empirical results.