Research on the influence of leverage ratio on the credit risk of commercial banks based on entropy weight method

Abstract

Entropy method refers to a method that is capable of effectively constructing comprehensive evaluation indexes. In accordance with this method, the evaluation of abstract transactions can be carried out in an objective and systematical way with the integration of the principle of information entropy and relevant indexes. The calculation of relevant indicators through entropy weight method excels in the measurement of credit risk. On the basis of theories of leverage ratio regulation and credit risk management of commercial banks, this thesis focuses on the empirical analysis on the relevant data of 21 listed commercial banks in China from 2014 to 2019 after the exclusion of the impact imposed by the epidemic. Survey has been carried out on the relationship between leverage ratio and bank credit risk and the influence of leverage ratio on China's commercial bank credit risk management from both micro- and macroperspectives. In accordance with the conclusion drawn in this thesis, suggestions were put forward for the supervision policies of commercial banks, which means to provide practical references for the credit risk management of commercial banks and better formulation of relevant supervision policies.