The Impact Of Geographic Diversification On Funding Costs Of City Commercial Banks

July 2017,President Xi Jinping delivered an important speech on the National Financial Work Conference held in Beijing,stressed the need to promote financial institutions to reduce operating costs,clean up the norms of intermediate business links,to avoid disguised to raise the cost of real economic financing.Thus,it is necessary to study the impact of geographic diversification on funding cost of city commercial banks.Since April 2009,China Banking Regulatory Commission promulgated the "Opinions on the Adjustment of Market Access Policies for Small and Medium-sized Commercial Bank Branches(Trial)",which loosened the restrictions on the establishment of branches in the joint-stock and commercial banks,so the development of geographic diversification of city commercial banks steps into a new stage.City commercial bank as an important part of Chinese financial system,it is necessary to study its cross-regional operations on the impact of funding costs.Based on the data of 108 city commercial banks from 2008 to 2016,the non-equilibrium panel model was constructed.The OLS regression method and the GMM regression method were used to test the data,and the influence of the cross-regional operation on the funding costs was discussed.This paper further studies the impact of financial marketization and legal system environment on the funding costs of city commercial banks.Results show that(1)geographic expansion of city commercial banks can reduce the funding cost.(2)the advancement of the degree of marketization of the financial industry can curb the effect of cross-regional operation of the city commercial banks on the funding cost reduction,(3)the improvement of the legal system environment will change the cost of city commercial banks to the cost of cross-regional management of the sensitivity.This paper argues that the city commercial banks should carefully plan,rationally layout,take full account of distance,regional economic differences and other factors,and gradually explore the cross-regional business model in line with their needs,and government departments should build a most suitable legal system environment for the development of the city commercial banks,to promote the sound and rapid economic development.