This research is based on the panel data from the annual reports of Chinese commercial banks for the years 2010-2020. A panel data model is constructed to empirically investigate the influence of commercial banks' asset allocation on financial stability. The study innovatively explores the differences between large-scale banks and general-scale banks in this context, as well as the interaction effects between large-scale banks and their methods of capital application. The findings indicate that: firstly, the higher the proportion of corporate loans in commercial banks, the stronger the stability. With the support of national policies, the operating environment for emerging industries has improved, leading to a reduction in bankruptcy risks and further decreasing the credit risk of related banks, which contributes to the enhancement of banks' financial stability. Additionally, compared to securities investments affected by market fluctuations, corporate loans are less susceptible to significant capital changes, and their risks are primarily determined by the operating conditions of the related enterprises, making them relatively controllable. Secondly, the higher the proportion of personal loans in commercial banks, the stronger the stability. The largest part of personal loans consists of housing mortgage loans, which have a low non-performing loan rate and high quality in China. Therefore, an increase in personal loans helps to enhance the financial stability of banks. Thirdly, large-scale banks exhibit lower financial stability. Due to the redundancy in management personnel in large-scale banks, management costs, adjustment costs, and transaction costs are relatively high. Furthermore, it is worth noting that because large-scale banks hold a significant amount of surplus funds, they are prone to excessive securities investments. Fluctuations in the securities market increase external risks and decrease financial stability.
| Published in | Mathematics and Computer Science (Volume 9, Issue 4) |
| DOI | 10.11648/j.mcs.20240904.11 |
| Page(s) | 64-73 |
| Creative Commons |
This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited. |
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Copyright © The Author(s), 2024. Published by Science Publishing Group |
Commercial Banks, Asset Allocation, Financial Stability, Asset Size, China
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APA Style
Zixin, H., Long, H., Hyun, B. S. (2024). Asset Allocation and Bank Resilience: China Insights. Mathematics and Computer Science, 9(4), 64-73. https://doi.org/10.11648/j.mcs.20240904.11
ACS Style
Zixin, H.; Long, H.; Hyun, B. S. Asset Allocation and Bank Resilience: China Insights. Math. Comput. Sci. 2024, 9(4), 64-73. doi: 10.11648/j.mcs.20240904.11
AMA Style
Zixin H, Long H, Hyun BS. Asset Allocation and Bank Resilience: China Insights. Math Comput Sci. 2024;9(4):64-73. doi: 10.11648/j.mcs.20240904.11
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Download@article{10.11648/j.mcs.20240904.11,
author = {Huang Zixin and Hai Long and Bae Soo Hyun},
title = {Asset Allocation and Bank Resilience: China Insights
},
journal = {Mathematics and Computer Science},
volume = {9},
number = {4},
pages = {64-73},
doi = {10.11648/j.mcs.20240904.11},
url = {https://doi.org/10.11648/j.mcs.20240904.11},
eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.mcs.20240904.11},
abstract = {This research is based on the panel data from the annual reports of Chinese commercial banks for the years 2010-2020. A panel data model is constructed to empirically investigate the influence of commercial banks' asset allocation on financial stability. The study innovatively explores the differences between large-scale banks and general-scale banks in this context, as well as the interaction effects between large-scale banks and their methods of capital application. The findings indicate that: firstly, the higher the proportion of corporate loans in commercial banks, the stronger the stability. With the support of national policies, the operating environment for emerging industries has improved, leading to a reduction in bankruptcy risks and further decreasing the credit risk of related banks, which contributes to the enhancement of banks' financial stability. Additionally, compared to securities investments affected by market fluctuations, corporate loans are less susceptible to significant capital changes, and their risks are primarily determined by the operating conditions of the related enterprises, making them relatively controllable. Secondly, the higher the proportion of personal loans in commercial banks, the stronger the stability. The largest part of personal loans consists of housing mortgage loans, which have a low non-performing loan rate and high quality in China. Therefore, an increase in personal loans helps to enhance the financial stability of banks. Thirdly, large-scale banks exhibit lower financial stability. Due to the redundancy in management personnel in large-scale banks, management costs, adjustment costs, and transaction costs are relatively high. Furthermore, it is worth noting that because large-scale banks hold a significant amount of surplus funds, they are prone to excessive securities investments. Fluctuations in the securities market increase external risks and decrease financial stability.
},
year = {2024}
}
TY - JOUR T1 - Asset Allocation and Bank Resilience: China Insights AU - Huang Zixin AU - Hai Long AU - Bae Soo Hyun Y1 - 2024/09/06 PY - 2024 N1 - https://doi.org/10.11648/j.mcs.20240904.11 DO - 10.11648/j.mcs.20240904.11 T2 - Mathematics and Computer Science JF - Mathematics and Computer Science JO - Mathematics and Computer Science SP - 64 EP - 73 PB - Science Publishing Group SN - 2575-6028 UR - https://doi.org/10.11648/j.mcs.20240904.11 AB - This research is based on the panel data from the annual reports of Chinese commercial banks for the years 2010-2020. A panel data model is constructed to empirically investigate the influence of commercial banks' asset allocation on financial stability. The study innovatively explores the differences between large-scale banks and general-scale banks in this context, as well as the interaction effects between large-scale banks and their methods of capital application. The findings indicate that: firstly, the higher the proportion of corporate loans in commercial banks, the stronger the stability. With the support of national policies, the operating environment for emerging industries has improved, leading to a reduction in bankruptcy risks and further decreasing the credit risk of related banks, which contributes to the enhancement of banks' financial stability. Additionally, compared to securities investments affected by market fluctuations, corporate loans are less susceptible to significant capital changes, and their risks are primarily determined by the operating conditions of the related enterprises, making them relatively controllable. Secondly, the higher the proportion of personal loans in commercial banks, the stronger the stability. The largest part of personal loans consists of housing mortgage loans, which have a low non-performing loan rate and high quality in China. Therefore, an increase in personal loans helps to enhance the financial stability of banks. Thirdly, large-scale banks exhibit lower financial stability. Due to the redundancy in management personnel in large-scale banks, management costs, adjustment costs, and transaction costs are relatively high. Furthermore, it is worth noting that because large-scale banks hold a significant amount of surplus funds, they are prone to excessive securities investments. Fluctuations in the securities market increase external risks and decrease financial stability. VL - 9 IS - 4 ER -
Henan Province Social Work and Social Governance Soft Science Research Base, Henan Normal University, Xinxiang City, China
Henan Province Social Work and Social Governance Soft Science Research Base, Henan Normal University, Xinxiang City, China
Henan Province Social Work and Social Governance Soft Science Research Base, Henan Normal University, Xinxiang City, China
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