Relationship Study Between Loan Diversification And Operating Efficiency From Commercial Banks Of China

Commercial banks play a crucial role in the optimal allocation of market funds and transmission of monetary mechanisms for it's the key of China financial system.With the rise of more and more commercial banks,existing commercial banks are facing with their own new normal situations,for example,the slowdown of loan growth,the narrow interest spreads of deposit and loan,the transformation of financing mode,the bounces back of non-performing loan ratio and so on.Improving efficiency of commercial banks is so significant since they are facing with serious pressure.Besides,commercial banks hold its specific risk for they are special enterprise who operate virtual product,such as assets operation risk represented by loan in different regions and different industries.Therefore,how to deal with the loan direction,in other words,the loan diversification problem,is important for banks' management and administration.This paper points out that there are rare references analyze the commercial banks operation efficiency from the point of loan diversification and there are so many references estimated efficiency with non-parametric estimation method rather than parameter estimation method after sorting the relative literature.Based on that,this paper,with the data of 40 listed commercial banks of China from 2007 to 2016,to begin with,calculated the loan diversification index and operation efficiency with stochastic frontier approach;then estimated the relationship between loan diversification index and operation efficiency with panel data model;finally,gave suggestions to promote commercial banks' operating efficiency.This paper can be divided into five parts.The first chapter introduces the background and meanings,theoretical foundation as well as references.The theoretical foundation is recommended from the perspective of diversification and efficiency and the references is expounded to provide the basis for the indicator selection of loan diversification.Then,the first chapter evaluates the innovation and shortcomings of this research.The second chapter is about the development history of commercial banks and loan diversification.The third chapter introduces the research methods and design empirical model combined with the second chapter summary.Fixed assets,interest expense,non-business expense and payable employees' wages and salaries are chosen as input items and net profit is chosen as output item for SFA method to estimate commercial banks efficiency.In the panel data model,the banking efficiency is set as explained variable meanwhile the loan diversification index is set as explanatory variable,including loan industries diversification which is measured by Herfindahl index and loan client diversification which is measured by the largest ten customer loan ratios.Besides,and the control variables are chosen in micro-level,medium level and macro-level.The forth chapter are descriptive statistics and empirical model results.The research shows uptrend of total cost,labor price and funds price but downtrend of capital price.Moreover,the loan industrial diversification has no relationship with banking efficiency,loan client concentration and loan-to-deposit ratio have negative correlation with banking efficiency and average return on assets has significant positive correlation with banking efficiency.The fifth chapter gives five suggestions to promote banking efficiency,including cost reduction,concentration of loan customers reduction,supervision standard of loan concentration perfection,profit model change and social credit system establishment.This paper could provide a reference for the commercial banks development for the large sample size,and will be beneficial to the diversified loan standard setting and efficiency increasing.