Bank Of China Research Articles

Macroprudential policy, bank risk and efficiency: some evidence from China

This paper examines the impact of macroprudential policy on bank risk by utilizing the panel data of 360 commercial banks in China during the period of 2007–2018. The results demonstrate that overall bank risk decreases in response to tightened macroprudential policy. Furthermore, listed banks and banks with larger size benefit more from macroprudential tightening, and macroprudential policy works more effectively when monetary policy is tightened. Additionally, our findings uncover the mediating role of bank efficiency in the relationship between macroprudential policy and bank risk. We observe that bank efficiency increases when macroprudential policy is tightened, which subsequently contributes to a reduction in bank risk. This impact on bank risk is primarily achieved by mitigating banks’ leverage and enhancing their profitability.

The Influence of the Soviet Legal Model on the Law Directing the Establishment and Operation of Vietnam and China's Central Banks

The Soviet legal model significantly influenced the legal stance, operation and organization of central bank branches in China and Vietnam. According to research on the effect of the Soviet legal model on the organization and operations of the Central Bank of China and the Central Bank of Vietnam, the Soviet legal model assisted Vietnam and China in creating major legislative frameworks for the banking sector. However, the legal status of Russian banks has evolved in the direction of being more autonomous and efficient; at the same time, the People's Bank of China branch was also restructured to be more streamlined and efficient. These are the areas in which the State Bank of Vietnam has to improve in order to grow more successfully.

Market Competition, Non-Interest Income and Risk-Taking of Small and Medium-Sized Banks

ABSTRACT Taking the data of 61 small and medium-sized commercial banks in China from 2014 to 2021 as a research sample, this paper conducts an empirical study on the relationship between market competition and the risk-taking of small and medium-sized banks, and further considers the moderating role of economic policy uncertainty and non-interest business income. The results show that the intensification of market competition increases the risk-taking of small and medium-sized banks. Meanwhile, economic policy uncertainty dampens the positive effect of market competition on bank risk-taking, and commission income and other non-interest income have important mediating effects in the relationship between market competition and bank risk-taking.

Risk Assessment of Banks and Financial Institutions under COVID-19 Crisis

Systemic risk refers to risks that have a broad and severe impact on the entire financial system or economic system. There are similarities in the definition of systemic risk in China and abroad, which usually refer to threats to the entire financial system or economic system, which can trigger a chain reaction and lead to a systemic collapse. In terms of characteristics and measurements, there may be some differences in views and methods at home and abroad. While foreign countries usually pay more attention to the interconnectedness of financial institutions, market liquidity, macroeconomic factors, etc., China may pay more attention to factors such as the stability of financial markets and the role of state-owned enterprises and governments in the economy. The shortcomings of systemic risk abroad may lie in the fact that the unique circumstances of some characteristic countries or regions are sometimes overlooked, because these factors are not universally applicable on a global scale. Due to its unique environment of large economic size, complex financial system, government intervention, and the influence of state-owned enterprises, the study of systemic risk is particularly important for China. This particular situation may require unique methods and metrics to measure and address risks to ensure the stability and sustainability of China's financial system. It is precisely in view of the lack of foreign research on China's specific context that it is of great significance to study the systemic risk of China's banking industry under China's financial system.

Research on Credit Risk Measurement and Management of Commercial Banks in China

This comprehensive study explores the sophisticated landscape of credit risk measurement and management within the commercial banking sector of China, a critical component in maintaining the resilience and stability of its burgeoning financial system. As China's economy continues to integrate with the global market, its banking sector faces escalating credit risk challenges, necessitating advanced and effective management strategies. This paper critically examines the existing methodologies for measuring credit risk, including both traditional approaches and modern innovations that leverage big data and artificial intelligence, assessing their applicability and efficiency in the Chinese context. Moreover, we delve into the multifaceted strategies employed by Chinese commercial banks to manage credit risk, focusing on the integration of regulatory frameworks, technological advancements, and best practices in risk management. Through a methodical review of literature and case studies of prominent Chinese banks, this study identifies key trends, challenges, and opportunities in credit risk management. We evaluate the effectiveness of current practices and propose a set of strategic recommendations aimed at enhancing the robustness of credit risk management systems. These include adopting a more holistic approach to risk assessment, leveraging technology to predict and mitigate risk, and fostering a culture of risk awareness and compliance.

Risking or de-risking? The effect of banking competition on large state-owned banks and small and medium-sized enterprise lending: Evidence from China

This study examines the effect of the expansion of small and medium-sized bank branches on large state-owned banks in China based on bank branch-level financial data and detailed loan-level data from 2008 to 2015. We find that the expansion of small and medium-sized banks favorably impacts the operating income of large state-owned banks without intensifying bank risk-taking. Large state-owned banks, used to lack competition, expand their total lending scale to achieve more operating revenue by servicing more firms, especially small and medium-sized enterprises (SMEs). This promotes SMEs' access to finance, while also raising the operating costs of large state-owned banks. More importantly, the lending standards and loan quality of large state-owned banks do not deteriorate, implying that they do not employ risky lending tactics to deal with increased competition.

Green finance and high-pollution corporate compensation - Empirical evidence from green credit guidelines

With the increasing focus on Environmental, Social, and Governance (ESG) and Corporate Social Responsibility (CSR) on a global scale, stakeholders expect businesses to transform and enhance social responsibility. Over time, ESG and CSR have developed into vital performance metrics for businesses. Businesses are actively putting improvement measures into place in response to this new paradigm in order to stay competitive in this changing environment. China's dual commitment to CSR and sustainable development is in line with wider objectives, such as resolving issues of pay inequality. In 2012, the China Banking Regulatory Commission (CBRC) unveiled the “Green Credit Guidelines” (GCG), which take corporate governance's environmental considerations into account. These regulations set standards and specifically target high-pollution corporations. Companies may need to restructure their corporate structures and create efficient governance mechanisms in order to comply with these regulations and reduce carbon emissions. This will have an impact on the compensation packages of executives and regular employees.The most important question is how the “GCG” will affect the wage disparity in highly polluting companies. This study examines the 2012 “GCG” and its potential to reduce internal wage disparities, viewing it as a critical element of green financial policy. The paper uses data from Chinese A-share listed companies from 2007 to 2020. Besides, it uses the Difference-in-Differences method to assess the impact of China's GCG, treating its implementation as a quasi-natural experiment and controlling for concurrent policy effects to precisely identify its net impact on corporate carbon emissions and internal wage disparities.The findings show that “GCG” considerably closed internal wage disparities. Furthermore, the “GCG” has a path of guidance, incentives, and punishments that reduce internal wage disparities and promote a more equitable wage distribution within businesses. According to heterogeneity analysis, policies have a greater impact on the wage gap in businesses that are highly dependent on outside funding and have political connection. In order to achieve a compensation balance and meet the objectives of social responsibility and corporate sustainable development, the government should strengthen the complementary effects of green financial policies.The compensation balance in highly polluting companies has important theoretical and practical ramifications. On the one hand, it represents the convergence of income equality, corporate governance, and environmental responsibility. It helps to expand knowledge of sustainable development, fair compensation, and environmental policies. On the other hand, the widening pay disparity between executives and average employees reflects the exacerbation of income inequality in China, which could potentially impact companies' long-term development. Conversely, a well-balanced pay plan can improve worker productivity and motivation while empowering stakeholders to make wise investment choices.

A Study on the Application of Big Data Auditing in Commercial Banks

The rapid development of network and information technology has brought the auditing work into the era of networkization. 5G, big data, cloud computing, blockchain, artificial intelligence and a series of new technologies have emerged, which have brought brand-new changes and enhancements for banks in China, and at the same time brought new demands for the auditing work of commercial banks. At the same time, we are required to carry out comprehensive optimization and upgrading of the audit work through the application of big data, and to promote the big data of the audit work. Therefore, this thesis focuses on an in-depth analysis of the meaning and technical characteristics of big data, and explores the specific use of big data in commercial banks.

A comparative study of environmental information disclosure between banks in net-zero banking alliance and China

This study compares the discourse and quality of environmental information disclosure (EID) in reports from five banks in Net-Zero Banking Alliance (NZBA) and four banks in China over the period 2016–2021. Python is employed as the primary research tool to work out the high-frequency words and the word co-occurrence matrix. With the theoretical framework of the Global Reporting Initiative's (GRI) six principles for defining report quality, the Analytic Hierarchy Process (AHP) is employed to construct a quality assessment model, calculating the total weight of each corpus. The results indicate distinct differences in the information disclosure themes between NZBA and Chinese banks. As for the quality, NZBA banks exhibit higher quality environmental information disclosure compared to Chinese banks. Specifically, NZBA banks outperform in the principles of balance, accuracy, and clarity. This study contributes significantly to the analysis of environmental information disclosure, highlighting disparities in discourse and report quality between NZBA and Chinese banks. The findings offer valuable insights for banking practitioners, aiding them in enhancing the quality of environmental information disclosure. This study further reflects the varying economic and developmental priorities of the two banking contexts, influenced by economic and technological cycles.

SUSTAINABLE HOUSING DEVELOPMENT IN CHINA: DOES FINANCIAL INSTITUTIONS OVERCOME THE RISKS AND CHALLENGES TO SUSTAINABLE HOUSING?

Housing industry is one of the major threats to global environment and resource depletion. Particularly in China, it is regarded as a major challenge due to massive population growth. The most common barriers involve; economic barriers and environmental barriers. Therefore, to promote sustainable housing development, the management of these barriers is most crucial. This study is an attempt to overcome these barriers with the help of financial institutions in the context of China. The sample of the study are construction sector employees which are selected through simple random sampling method. Partial Least Square (PLS) is employed as statistical tool to analyze the primary data. Results revealed the positive role of financial institutions to overcome the challenges related to the economic barriers and environmental barriers. Financing from banks for the sustainable housing schemes can reduce the economic barriers and help to fulfil the sustainable housing criteria. Similarly, the environment requirements can also be achieved through environmental policy developed by the banks in China. This study recommended the Chinese government to promote sustainable hosing development through the promotion of bank financing and implementation of banks environmental policies.

THE IMPACT OF CLIMATE CHANGE ON THE RISK-TAKING LEVEL OF CHINESE COMMERCIAL BANKS: EMPIRICAL EVIDENCE FROM CHINESE LOCAL COMMERCIAL BANKS

China’s risk disasters caused by climate change have increased the risk-taking level of China’s commercial banks, posing a threat to the stable development of financial markets. Based on the data from 152 commercial banks in China from 2011 to 2021, this paper uses the fixed effect model to analyze the effect and mechanism of China’s climate change on the risk-taking level of Chinese commercial banks. The main conclusions are as follows. (1) Climate change has significantly improved the risk-taking level of Chinese commercial banks. The results remain significant under the robustness and endogenous tests, such as dealing with endogenous problems, changing variables and adjusting sample intervals. (2) The results of heterogeneity analysis show that under different regions and different types of conditions, the impact of climate change on the risk-taking level of China’s commercial banks is heterogeneous, and the impact is stronger in urban commercial banks and eastern China. (3) The direct economic losses caused by natural disasters caused by climate change affect the risk-taking level of Chinese commercial banks; however, the adjustment of ex ante disaster insurance can weaken the impact of climate change on the risk-taking level of Chinese commercial banks. This paper studies the impact of climate change on the risk-taking level of Chinese commercial banks from the perspective of bank risk-taking level, which is of great significance to enhance the risk prevention awareness of Chinese commercial banks in response to climate change.

Beyond Size: How ESG Factors Shape Bank Value in India & China

Objective: This study examines the impact of ESG (environmental, social, and governance) factors on the market capitalization of banks in India and China. Specifically, it analyses the relationship between total assets, female board representation, social and environmental disclosures, and market capitalization.
 Methods: A comparative analysis of leading banks in India and China is conducted using 10 year (2013–2023) data using structural equation modelling (SEM) on market capitalization, total assets, ESG disclosures, and female board representation.
 Results: A positive and significant relationship is found between total assets and market capitalization in both India and China, indicating that investors value larger banks. In India, female board representation doesn't significantly impact market capitalization, while in China, a higher proportion may lead to lower market capitalization, requiring further research. A positive and significant relationship is found between social and environmental disclosures and market capitalization in both countries. However, the effect is stronger in India, indicating that Indian investors place greater value on banks with robust sustainability practices.
 Conclusions: This study highlights the growing importance of ESG factors in the banking sector, with varying degrees of emphasis depending on the country. While both Indian and Chinese investors value larger banks, Indian investors seem to place more weight on female board representation and social-environmental disclosures, while Chinese investors appear to prioritize other factors. Further research is needed to explore the underlying reasons for these differences and the complex interplay between various ESG factors and market performance.

Does Fintech Investment in Commercial Banks Improve Business Performance? -- Based on the Empirical Test of 42 Listed Commercial Banks in China from 2010 to 2022

Does Fintech Investment in Commercial Banks Improve Business Performance? -- Based on the Empirical Test of 42 Listed Commercial Banks in China from 2010 to 2022

A Study on Influencing Factors of Willingness to Use E-CNY Based on Logistic Model

The development of mobile technology has facilitated the widespread adoption of digital currency worldwide. An important application of mobile technology is digital currency, which has gained global popularity due to its blockchain and peer-to-peer mobile payment mechanisms. The emergence of private digital currencies, such as Bitcoin, poses a challenge to the monetary policy of governments. To address this threat, many central banks are developing their own central bank digital currencies (CBDCs) with legal support. China’s CBDC, e-CNY (electronic China Yuan), is one of the most advanced examples of this innovation. However, the adoption and usage of e-CNY by residents is still limited and requires improvement. This paper aims to identify and analyze the factors that influence residents’ willingness to use e-CNY, based on a literature review and a logistic regression model. The results indicate that residents’ awareness, convenience, cost, promotional activities, and the involvement of relevant parties (merchants, commercial banks, payment institutions, and the People’s Bank of China (PBC)) significantly influence their willingness to use e-CNY. This paper presents implications and suggestions for promoting and implementing e-CNY in China.

Investigation related to database design for letter of credit

The "Letter of Credit" is a fundamental payment mechanism in global trade, and its efficiency has significantly declined due to the impact of the COVID-19 pandemic. This document delves deeply into the development and execution of a comprehensive database for managing Letters of Credit (L/Cs). It is designed with a real-world case study derived from the International Settlement Department of the Bank of China. The central goal of this database is to enhance the efficient management and simplification of the complex procedures inherent in L/C transactions. The development process follows a systematic approach, commencing with the establishment of three fundamental assumptions to delineate the scope of the study. Subsequently, the database design progresses through stages involving Entity-Relationship Diagram (ERD) development, relational model construction, and normalization procedures. These steps collectively culminate in the creation of an intelligently structured database comprising thirteen distinct tables. In conclusion, this paper not only delves into the design and implementation of the L/C database but also showcases its practicality through real-world scenarios. The database, fueled by meticulous design and thoughtful implementation, is poised to revolutionize the management of L/C operations, offering enhanced efficiency and accuracy in international trade transactions.

Economic growth targets and bank risk exposure: Evidence from China

Managing growth targets to maintain economic growth is a common practice worldwide. Using data of local commercial banks over the period 2003 to 2019, we examine the effect of local economic growth targets on the risk exposure of commercial banks in China. We find that local economic growth targets are positively associated with bank risk exposure. This relationship is more pronounced in (1) state-owned banks and those with executives having stronger promotion incentives, (2) provinces with politicians at critical stages for promotion, lower marketization, and lower growth potential, and (3) periods with bleak economic outlook and greater economic policy uncertainty. We further discuss two possible channels through which growth targets affect bank risk: the credit allocation channel and the credit quality channel. Our study sheds new light on the potential costs associated with local governments’ efforts to stabilize economic growth from the perspective of bank risk exposure.

Effects of temperature anomaly on sperm quality: A multi-center study of 33,234 men

BackgroundsGlobal fertility rates continue to decline and sperm quality is a prime factor affecting male fertility. Both extreme cold and heat have been demonstrated to be associated with decreased sperm quality, but no epidemiological studies have considered human adaptation to long-term temperature. Our aim was to conduct a multi-center retrospective cohort study to investigate exposure-response relationship between temperature anomaly (TA) that deviate from long-term climate patterns and sperm quality. MethodsA total of 78,952 semen samples measured in 33,234 donors from 6 provincial human sperm banks in China were collected. This study considered heat and cold acclimatization to prolonged exposure in humans and explored the exposure-response relationship between TAs and sperm quality parameters (sperm concentrations, sperm count, progressive motility, progressive sperm count, total motility and total motile sperm count) during the hot and cold seasons, respectively. Linear mixed models and generalized linear models were built separately for specific centers to pool in a meta-analysis to obtain the pooled effect of TA on sperm quality, considering repeated measurements data structure and spatial heterogeneity. ResultsWe identified an inverted U-shaped exposure-response relationship between TA and sperm quality during the hot season. Significant negative effect of anomalous cold on sperm quality during the hot season was found after additional adjustment for Body mass index, marital status and childbearing history. The heat-related TA in hot season was significantly negatively associated with sperm concentration, progressive sperm count and total motile sperm count (all P-values<0.05). After adjusting the relative humidity, the cold-related TA in cold season was negatively associated with the sperm total motility (P-values<0.05). ConclusionsOur results suggest both heat-related and cold-related TAs are associated with decreased sperm quality. The findings highlight the importance of reducing exposure to anomalous temperatures to protect male fertility.

Introduction about world agricultural Bank

A type of bank that lends money to farmers for longer periods of time and charges them less interest than other types of banks. In the Paleolithic Levant, 23,000 years ago, cereals cultivation of emmer, barley, and oats has been observed near the sea of Galilee. Rice was domesticated in China between 11,500 and 6,200 BC with the earliest known cultivation from 5,700 BC, followed by mung, soy and azuki beans Agricultural Bank of China, also known as AgBank, is one of the "Big Four" banks in China. It was founded on 10 July 1951, and has its headquarters in Dongcheng District, Beijing. It has branches throughout mainland China, Hong Kong, London, Tokyo, New York, Frankfurt, Sydney, Seoul, and Singapore. This study were examined relationship between BANK CREDITS and investment growth of agricultural in international sector.The results confirm the existence of a long-run relationship between variables in model. In addition, according to the results, bank credit is the most significant variable in explaining the GROWTH INVESTING, so that increases access to it will encourage growth investment of the agricultural sector. The first official agricultural finance institution of Iran was established in 1933.

Two‐stage credit risk prediction framework based on three‐way decisions with automatic threshold learning

AbstractCredit risk prediction is a binary classification problem. Using two‐way decisions to classify defaulters may lead to decision errors due to insufficient information. To solve this issue, in addition to identifying borrowers as defaulters and nondefaulters, this paper introduced the delay‐decision mechanism in three‐way decisions, so that records acquiring more information do not make decisions immediately. A two‐stage credit risk prediction framework based on three‐way decisions was proposed to reduce decision risk. In this framework, the decision cost values of three‐way decisions were simplified by analyzing the credit risk prediction, and the expression of threshold calculation was also modified. An optimization objective was built according to the trade‐off between information gain and decision cost, and the particle swarm optimization algorithm was applied to learn the decision thresholds. After adding more supplementary information, the samples in the delayed‐decision region were made further decisions. A dataset from a commercial bank in China was employed to conduct experiments, and the results demonstrated that our proposed method outperformed various base classifiers.

Can setting up inside debt accelerate the bank's digital transformation? Evidence from China

PurposeDigital transformation is essential for commercial banks to maintain long-term competitiveness in the digital economy era. This study aims to investigate the relationship between inside debt and the bank's digital transformation.Design/methodology/approachThis study set up a quasi-natural experiment based on implementing the executive compensation deferral system in the Chinese banking industry. Using the annual panel data of 180 commercial banks in China from 2007 to 2021, this study employed the difference-in-differences (DID) method to conduct an empirical analysis.FindingsThis study confirms a significant statistical relationship between inside debt and the bank's digital transformation, and managerial myopia is the transmission channel of inside debt affecting the bank's digital transformation. Furthermore, the development of Internet finance and the enhancement of bankers' confidence will improve the contributions of inside debt to the bank's digital transformation.Originality/valueThis study contributes to the literature on inside debt and the bank's digital transformation. It has specific policy value for the scientific design of the banking compensation mechanism and accelerating banks' digital transformation.