Research On Influence Of Geographic Diversification On The Chinese Listed Banks' Risk

The profit-making enterprises,including commercial banks,not only pursue the maximization of value,but also pay attention to the dispersion and avoidance of risk.Geographic diversification can promote scale economies,scope economies and synergies,find new profit growth points,reduce business development costs,and enhance banking value and decentralization of business risks.But the empirical analysis did not get a unified conclusion.The domestic research is mainly focused on the impact of the diversification of the bank's income on the operating performance,and the research on the management risk is less involved.This dissertation will analyze the impact of regional diversification of commercial banks on the risk level,and will fill the weak areas of this study.On the basis of combing the existing literature,this dissertation puts forward 3 propositions concerninggeographic diversification affecting the risk of listed banks,and conducts in-depth research on three propositions using data from 16 listed banks in China's A share market from 2007 to 2016.This dissertation first describes the calculation methods of three kinds of regional diversification indicators,including Loan Dispersion,Headquarter-Branch Distance and GeographicDiversification Index,and selects control variables to design econometric analysis models.Then,descriptive statistical analysis,panel model estimation and robustness test for 16 listed banks,large listed banks and small and medium-sized listed banks based on the whole sample data and sub sample data are conducted successively.Statistical analysis showed that the large listed banks with higher loan dispersion,total branch distance and geographical diversification index in the business,which is a higher level of geographic diversification;when Stock Monthly Return Standard Deviation as a measure of risk,large listed banks have a lower level of risk.The results of the model show thatthat Loan Dispersion is beneficial to the reduction of banks' risk,and Headquarter-Branch Distancewill increase risk.Meanwhile,the former impact is weaker than the latter.Therefore,China's listed banks need to carry out industrial decentralization,but to avoid expand blindly,especially for small and medium-sized listed banks.