Research On The Impact Of Net Value Transformation Of Financial Products On The Risk Of Commercial Banks

With the rapid development of financial products market in the past ten years,Chinese commercial banks are facing more risks while raising funds through financial services.Since 2018,with the promulgation of the Guiding Opinions on Standardizing the Asset Management Business of Financial Institutions(hereinafter referred to as the New Regulations on Asset Management)and the Measures on the Management of Financial Subsidiaries of Commercial Banks(hereinafter referred to as the Measures on the Management of Financial Subsidiaries),Unified regulatory standards,breaking rigid payment,speeding up the transformation of net worth,eliminating multi-layer nesting and maturity mismatch have become the common regulatory guidance faced by the large capital management industry,including bank financial services.At the same time,the impact of financial products on the risk taking of commercial banks continues to attract the attention of scholars.The expanding financial services themselves have brought greater uncertainty risks to the operation of banks.Therefore,it is of theoretical and practical significance to study the influence of net worth transformation of financial products on banks’ risk bearing and its influence mechanism under the background of the New Regulations on Capital Management,and put forward suggestions for commercial banks in the future on supervision of bank financial services,how to prevent bank risks,design and operation of net worth financial products,etc.This paper selected the samples of 124 Chinese commercial banks from 2007 to2021,took the bank’s bankruptcy probability index LNZ as the explained variable to measure the risk of commercial banks,and took the ratio of net worth financial products to the total number of products issued as the explanatory variable to study the impact of net worth financial products on the risk of commercial banks.Furthermore,the paper makes a comprehensive mechanism analysis from three aspects: the behavior of "collecting deposits at high interest",the scale of shadow banking and the profitability of banks.In addition,through the heterogeneity analysis,this paper finds that for different banks,the degree of influence of net worth of financial products on their risks is quite different.Based on relevant empirical studies,this paper draws the following conclusions:First,commercial banks can reduce their own risks through the transformation of financial products into net worth;Second,the transformation of net worth of financial products reduces the excess yield of financial products of commercial banks,restrains the growth of the scale of shadow banking,improves the profitability of banks,and thus reduces the risks of banks.Third,compared with state-owned banks,the net worth of financial products plays a more significant role in reducing the risk of non-state-owned banks.Compared with listed banks,the net worth of financial products plays a more significant role in reducing the risk of non-listed banks.Compared with banks that start to finance subsidiaries,the net worth of financial products has a more significant effect on reducing the risk of banks that do not set up financial subsidiaries.Finally,based on the empirical results and combined with the current problems encountered in the development of Chinese financial services,the paper puts forward corresponding policy recommendations from the two aspects of the regulator and the bank.