An Empirical Study On The Impact Of Loan Concentration On The Income And Risk Of China’s City Commercial Banks

As a local financial institution,city commercial banks are originally intended to provide financial services to local enterprises and urban and rural residents.However,driven by information asymmetry between banks and enterprises,macro policy idance and profit maximization,urban commercial banks also prefer hot industries and high-quality "big customers" in the process of credit resource allocation,resulting in loan concentration.As we all know,the business of city commercial banks is greatly affected by regional economic conditions,industrial development and economic fluctuations.When the bank loan concentration risk and the economic downside risk are superimposed on each other,their risk exposure will be amplified,causing large-scale economic losses and even threatening regional financial stability.Therefore,it is of practical significance to study the concentration of loans and asset quality of city commercial banks.This paper measures the concentration of commercial bank loan investment from the perspectives of customer concentration,industry concentration and regional concentration.Based on the theoretical analysis of the impact of loan concentration on commercial bank income and risk,this paper analyzes the current situation of loan concentration.It was found that commercial banks had a phenomenon of concentrated loans and analyzed the reasons for this phenomenon.This paper takes the annual data of 19 city commercial banks from 2008 to 2017 as the research sample,and uses the panel data regression model to empirically test the income and risk effects of the loan concentration of urban industry banks,and draws the following conclusions:(1)From the perspective of the income of city commercial banks,the concentration of customers and regions is negatively correlated with the return on assets and the return on equity.It can be considered that the increase in customer concentration cannot bring more profit to the city commercial banks;industry concentration and region The two indicators of concentration and profitability are positively related,that is,the moderate concentration of credit funds in industries and regions can increase the profitability of banks to a certain extent.(2)From the perspective of the risk of urban commercial banks,the concentration of customers and regions is positively correlated,negatively correlated and negatively correlated with the non-performing loan ratio,capital adequacy ratio and provision coverage ratio,that is,the increase in customer concentration will result in the non-performing loan ratio of the city commercial banks.Increase,capital adequacy ratio and provision coverage ratio decrease,the risk faced by city commercial banks increases,and the ability to resist risks is impaired;industry concentration is positively correlated and negatively correlated with non-performing loan ratio and capital adequacy ratio,indicating industry and region An increase in concentration will lead to an increase in the risk of the bank.Based on the conclusions of empirical research and starting from reality,this paper proposes several countermeasures and suggestions to deal with the problem of loan concentration:(1)Strengthen the supervision of loan concentration.(2)Optimize the credit management model of city commercial banks.(3)From the perspective of the overall environment,we should actively promote the construction of the financial environment,specifically to improve the construction of the social credit system and reduce information asymmetry;improve the deposit insurance system and strengthen risk management capabilities.The problem of loan concentration can not effectively solve the problem of threatening the stable operation of banks,and research on the concentration of loans,especially focusing on the concentration of loans in urban commercial banks has certain practical significance.