The Influence Of Asset Securitization On The Profitability Of Commercial Banks

Under the external environment changes such as interest rate liberalization,Internet finance and COVID-19,the traditional profit model of commercial banks is facing severe pressure.As an innovative financial instrument,asset securitization can revitalize the stock of assets,adjust the maturity mismatch structure and improve the efficiency of capital operation.In 2022,The State Council and the People’s Bank of China also stressed that banks and other financial institutions should actively explore market-oriented ways such as asset securitization.It is of great significance to study the relationship between asset securitization and the profitability of commercial banks and clarify the mechanism of asset securitization affecting the profitability of commercial banks for optimizing the allocation of bank assets and improving the profitability of banks.First of all,this paper summarizes the basic knowledge of asset securitization,including the connotation of asset securitization,the classification of asset securitization and the operation process of asset securitization,and explores the motivation of the original equity holders,trustees and managers,and securities subscribers to participate in the issuance of asset securitization.The development status of credit asset securitization,enterprise asset securitization and asset-backed bill market is analyzed.Secondly,this paper investigates the positive impact of commercial banks’ asset securitization on their profitability from a theoretical perspective.Based on the improved Du Pont analysis method,return on equity,the proxy variable of bank profitability,is approximately decomposed into the product of return on risk-weighted asset return rate and the reciprocal of core Tire 1 captical adequacy ratio.It is further clarified that asset securitization affects bank profitability through the transmission channels of risk-weighted asset return rate,core Tier 1capital adequacy ratio,Tier 1 capital adequacy ratio and total capital adequacy ratio.The heterogeneous characteristics of asset securitization affecting bank profitability are discussed based on the size of commercial banks and the active degree of asset securitization.Finally,this paper empirically tests the impact on profitability of commercial banks after they participate in asset securitization activities.By selecting balance panel data of 38 commercial banks from 2012 to 2020 as samples,the fixed effect model,the mediating effect model,the moderating effect model and the grouping regression model were constructed to verify the positive relationship,the mechanism of action and the heterogeneity.The research results show that asset securitization is beneficial to improve profitability of commercial banks.Risk-weighted return on assets plays an intermediary effect in the process of asset securitization promoting bank profitability,core Tire 1 capital adequacy ratio,Tire 1 capital adequacy ratio and total capital adequacy ratio play a moderating effect in the process of asset securitization promoting bank profitability.Moreover,this positive impact presents obvious heterogeneity,showing that the larger the commercial bank is or the higher the active degree of asset securitization is,the more significant the effect of improving bank profitability by means of asset securitization is.Based on this,relevant policy suggestions are as follows: the state should promote commercial banks to develop asset securitization businesses to play their role in profit growth;regulatory authorities should attach importance to the motivation of banks to carry out asset securitization to prevent hidden risks;government departments should appropriately lower the entry threshold of commercial banks to participate in asset securitization activities to mobilize banks to actively join in the process of securitization.