Volume 29, Issue 5, 2020
DOI: 10.24205/03276716.2020.1015
The Effects of Non-interest Activities on Banking Loan Risk in China
Abstract
This research focuses on the impacts of non-interest business activities of commercial banks on the quality of bank loans. Chinese commercial banks are expanding into many fields relative to traditional savings and loans, and the effects of these non-interest business lines are showing up not just in financial statements, but also in their total operating and risk management. Taking annual data on 60 commercial banks in China from 2009 to 2017, this study uses empirical analysis to verify what influences exist and identifies the impacts of non-interest activities on the traditional business of commercial banks to test how the risk-taking operations of such banks change with a greater amount of non-interest activities. We want to see whether the reforms of Chinese banks have negative influences on their bank lending behaviors from the perspective of credit risk. Findings do show a significantly positive relationship between credit risk and non-interest activities in the group of large banks, but there is no such correlation for small commercial banks.
Keywords
commercial banks, credit risk, non-interest activities, China, loan risk