Research On The Impact Of Perpetual Bond Financing On Financial Risk Of Commercial Banks

In recent years,in the context of macroeconomic downturn,the development of the banking industry has inevitably experienced a downward trend.Some commercial banks are facing capital pressure issues such as limited access to other tier one capital instruments and declining capital adequacy ratios,deteriorating asset quality due to rising non-performing loan ratios,Against the backdrop of increasingly strict regulatory requirements for banking capital by regulatory authorities and the government’s policy of supporting banks in issuing perpetual bonds,perpetual bonds can quickly meet capital regulatory requirements,alleviate cash flow constraints,reduce asset liability ratio,optimize capital structure and reduce financial risks.The above advantages are deeply favored by commercial banks.The significance of this study lies in(1)extending the theoretical discussion of bank perpetual bonds to the financial risk section,enriching the relevant theories of bank perpetual bonds,which has certain theoretical research significance.(2)It has certain practical reference significance for helping banks solve capital replenishment problems by using perpetual bonds to reduce financial risks and promote the stable development of China’s banking industry.Based on a review of relevant literature and theoretical foundations of perpetual bonds,this article uses empirical analysis to explore the impact of listed banks’ financing of perpetual bonds on their financial risks.It is believed that the higher the proportion of perpetual bond balances to stock bond balances,the smaller the financial risks faced by banks;Large and medium-sized banks have a significant effect on reducing financial risk after current perpetual bond financing,while small banks have a time lag effect in the process of reducing financial risk by using perpetual bond financing.From four perspectives: anti-risk capability,asset quality,profitability,and debt repayment risk,take Bank of Beijing as the research object,a case study method is used to horizontally compare the relative changes in financial indicators of Bank of Beijing before and after perpetual debt financing with the average of the same industry,and vertically compare the changes in its own financial indicators before and after perpetual debt financing,then analyze the relationship between these financial indicators changes and perpetual debt financing to explore the impact of Bank of Beijing’s Perpetual debt financing on financial risk,and concludes that perpetual debt financing by Bank of Beijing can reduce financial risk by improving anti-risk capability,optimizing asset quality,enhancing profitability,and weakening debt repayment risk.The following suggestions are proposed:(1)The regulatory authorities should improve the management and supervision mechanism for banks before and after the issuance of perpetual bonds;(2)Issuing banks should make reasonable use of perpetual bonds to reduce financial risks,improve asset quality management,optimize fund utilization efficiency,and flexibly apply the special provisions of perpetual bonds,so as to maximize the effect of perpetual bonds on reducing bank financial risks.