Research On The Causes And Solutions Of Non-Performing Loans In Urban Commercial Banks

Since the reform and opening up,China’s modern financial system has been gradually established,and large state-owned commercial banks are gradually crossing the border to the world.Regional city commercial banks and rural commercial banks are becoming the most important financial institutions in the region,actively serving regional economic development and gradually growing in strength.In China,commercial banks are the most important financial institutions,currently accounting for more than 90%of the total assets of financial institutions.Large financial institutions are large in scale,have sound internal control systems,and are less subject to the influence and control of local governments,so they are more resilient to risks.Small commercial banks,represented by local city commercial banks,have small asset size,more arbitrary internal control systems,and are more influenced by local influence,so they generally face greater financial risks,and their ability to resolve them is weaker in the face of the threat of financial risks.In recent years,the financial risks brought by local commercial banks,represented by Baoshang Bank,have seriously affected regional financial stability and regional economic development.This paper takes the causes of non-performing loans of urban commercial banks as the research object,and studies their causes and resolution,which is conducive to fully understanding the current financial risks faced by urban commercial banks and ensuring the normal operation of urban commercial banks and the stability of the local financial system.In the research process,firstly,the common causes of non-performing loans of commercial banks are analyzed in common using the underlying data,and secondly,the individual causes of non-performing loans of urban commercial banks are analyzed in basic.In the empirical test,the data of Chinese listed city commercial banks from 2009-2021 are used to construct unbalanced panel data as the research object,the explanatory variable is measured by the non-performing loan ratio of city commercial banks,and the causes of non-performing loans are mainly selected as the individual causes of non-performing loans of city commercial banks,which mainly include local government intervention,political and business relations,legal environment,the political experience of the chairman,and concentration of customer loans.It is found that the lower the local government intervention and the cleaner the political-business relationship,the lower the NPL rate of local city commercial banks,the worse the legal environment,the political experience of the chairman,and the high concentration of customer loans will increase the NPL rate of city commercial banks.The heterogeneity test found that this phenomenon differed significantly among banks of different regions and sizes.The research in this paper,further clarifies the common and individual causes of nonperforming loans in urban commercial banks,and investigates their specific effects on nonperforming loans through empirical tests,and proposes countermeasures to inhibit the relevant causes.It further enriches the identification mechanism and resolution mechanism of the research on the causes of non-performing loans of urban commercial banks,which is of great significance for promoting the stable and healthy development of China’s financial system.