Regional Market Competition And Risk Taking Of City Commercial Banks

In February 2021,the First Intermediate People’s Court of Beijing ruled that Baoshang bank went bankrupt,which is another city commercial bank that went bankrupt after Hainan Development Bank closed in 1998.The bankruptcy of Baoshang Bank has brought the risk problem of commercial banks back to the public view.Among them,the city commercial banks with smaller scale,more flexible policies and more market vitality are particularly eye-catching.After more than 20 years of development,the overall operational strength of city commercial banks has been continuously enhanced,which has become an indispensable part of China’s banking financial system.But at the same time,the risk-taking of city commercial banks is still at a high level among all types of commercial banks,and the risk management is particularly worthy of attention.In order to explore the relationship between regional market competition and risk-taking of city commercial banks,this paper first reviews the research results of domestic and foreign scholars on city commercial banks and the relationship between market competition and risk-taking of commercial banks,and combs the relevant theories.Secondly,this paper selects the panel data of 91 city commercial banks from 2015 to 2019 to analyze the current situation of regional market competition and risk-taking of city commercial banks.Thirdly,this paper takes Z Index as the proxy variable of risk-taking of city commercial banks,Herfindahl-Hirschman Index(HHI)and Lerner Index as the proxy variable of regional market competition,and uses fixed effect model with Driscoll-kraay robust standard deviation to empirically analyze the relationship between regional market competition and risk-taking of city commercial banks as well as the influence of regional heterogeneity.This paper also analyzes the influence of ownership structure and cross regional operation.The main conclusions are as follows.First,there is a significant negative correlation between the regional market competition and the risk-taking of city commercial banks,which is in line with the theory of"competition stability".Second,there is no directional difference in the impact of market competition on the risk-taking of city commercial banks in the four regions of Eastern,Central,Western and Northeast China,but the degree of impact is different.Third,the risk-taking of city commercial banks in the low growth area of economic development is more affected by market competition.Fourth,from 2015 to 2019,China’ s city commercial banks are in a competitive market,and the degree of competition is increasing year by year.Fifth,equity concentration and equity balance of city commercial banks can effectively reduce their risk-taking,but the impact of government ownership is uncertain.Sixth,cross regional operation helps to reduce the risk of city commercial banks.Finally,combined with the research conclusions,the paper puts forward policy suggestions for city commercial banks and financial supervision.