Urban Commercial Banks Research Articles

The impact of fintech on the efficiency of urban commercial banks in China-based on super slacks-based measures with undesirable output

This study endeavours to elucidate the influence of financial technology (fintech) on the operational efficiency of urban commercial banks in China. By scrutinizing the integration of Internet-based fintech solutions, it seeks to illuminate their potential for streamlining banking processes, elevating customer experiences and augmenting the precision of credit assessments and lending decisions through sophisticated data analytics and risk management tools. This research evaluates the efficiency of Chinese urban commercial banks employing the Super Slacks-Based Measure (Super-SBM) which incorporates undesirable output. Furthermore, it leverages the System Generalized Method of Moments (System GMM) to investigate fintech’s specific impact on urban commercial bank efficiency across various Chinese regions. The findings underscore fintech’s pivotal role in catalyzing digital transformation within banks, thereby bolstering operational efficiency and customer satisfaction. Moreover, this study highlights the critical importance of fintech in fortifying risk management capabilities within the banking sector. The insights gleaned from this research contribute to the banking industry’s sustainable growth and competitive resilience. Additionally, the findings furnish policymakers with empirical evidence to support the strategic integration of fintech and the optimization of banking service processes. Urban commercial banks can streamline operations, enhance customer experiences, refine credit assessments and ultimately attain higher efficiency and long-term sustainability levels in the rapidly evolving financial landscape by harnessing the transformative potential of fintech.

Does liquidity regulation affect commercial banks' carbon bias? Evidence from China

This study demonstrates the influence mechanisms of liquidity regulation on banks' carbon bias through a simplified balance sheet model. Subsequently, we empirically analyze the impact of regulatory liquidity pressure on banks' carbon bias by using a sample of 213 Chinese commercial banks from 2009 to 2019. We find that liquidity regulation, which has a significant positive impact on banks' carbon bias, accounts for a 23% increase in the sample banks' aggregated carbon bias before and after the implementation due to the slow pace of decarbonization. Further, this effect becomes smaller when banks have lower initial reliance on stable funding or a lower capital adequacy ratio, and it is mainly found in state-owned, joint-stock, and urban commercial banks; banks with assets of no less than ¥200 billion; and during economic upturn periods. The main findings remain consistent after considering bank proactive liquidity management.

Divergent credit risk responses to local government debt among Chinese banks: a stress test analysis

ABSTRACT This study explores the heterogeneous impact of local government debt on credit risk across ‎state-owned and urban and rural commercial banks in China, through the analysis of stress test ‎methodology and quarter-based data in the period 2014–2021. It found that if the scale ‎of local government debt expands, the Non-Performing Loan (NPL) rates will reduce in state-owned commercial banks, ‎while the rural and urban commercial banks will increase. In the case of further decay in the scale of local government debt and macroeconomic indicators, there would be more credit risk in a heterogeneous manner among different-sized commercial banks. Medium-sized urban commercial banks have the smallest rise in non-performing loan rates due to the higher individual and corporate credit risks they face. Moreover, the study finds the resiliency of the risks weak and poor preparation for loan impairment in covering the potential loan losses in a pressured scenario compared to their counterpart urban and state-owned rural commercial banks. The findings suggest that rural commercial banks need to improve their risk ‎resilience to cope with extreme shocks.

Study on the Application of Internal Control in the Management of Urban Commercial Banks

In February 2021, Baoshang Bank, whose total asset size had exceeded 500 billion, exited the stage of history with more than 200 billion in unpayable debts. Now look back on its life, from the clouds fell to the bottom. However, there are traces of its causes. Weak supervision of funds, the organizational structure of the organization is a sham, excessive concentration of equity internal governance failure eventually became the key to its demise. Therefore, this paper will take the current situation of rising non‐ performing loan rate of urban commercial banks as the entry point to discuss the importance of internal governance and make suggestions for the establishment of a sound internal control system in urban commercial banks.

Has fintech affected the credit loan scale of urban commercial banks in China?

ABSTRACT This study aims to empirically examine the impact of financial technology (fintech) on the credit loan scale of urban commercial banks in China. Using panel data from Chinese urban commercial banks spanning 2011 to 2020, the study employs the Financial Technology Development Index to measure fintech development. The findings indicate that fintech significantly increases the credit loan scale of urban commercial banks. Heterogeneity analysis reveals that the magnitude of change in credit loans is more pronounced in urban commercial banks with larger scales and higher governance levels. The findings further indicate that fintech improves the information acquisition and processing capabilities of urban commercial banks, reducing information asymmetry and expanding the scope of credit services, particularly benefiting small and medium-sized enterprises. The study underscores the importance of technological innovation for banks to enhance risk assessment and address liquidity challenges. It also highlights the need for regulatory supervision to ensure the responsible use of fintech. Overall, the study contributes to the understanding of how fintech influences the credit loan scale of urban commercial banks and offers insights for banks and policymakers to leverage fintech for sustainable financial development.

Impact of fintech on the loan structure of urban commercial banks in China

The emergence of financial technology has created both opportunities and disruption in commercial banking. Commercial banks loans remain the primary source of finance for Chinese enterprises. Therefore, it is imperative to investigate the impact of financial technology on Commercial banks loan structures. This study uses relevant data from Chinese urban commercial banks from 2011 to 2019 and adopts empirical research methods to analyze the mechanism underlying the impact of fintech on the loan structure of urban commercial banks. The results indicate that the fintech is associated with improving credit and guaranteed loans, reduces mortgages and pledged loans, and promotes the optimization of loan structure of urban commercial banks. Fintech has a significant impact on the credit loan structures of urban commercial banks in the Eastern region, whereas its impact on urban commercial banks in the Central and Western regions is relatively small.

Measuring the productivity of urban commercial banks in China

This paper contributes to the productivity analysis literature by measuring the productivity of 76 urban commercial banks operating in China's 27 regions from 2013 to 2018. A spatial total factor productivity index is constructed using a spatial autoregressive production function. The index is decomposed into the efficiency change and the returns to scale change, and it identifies both spatial direct (feedback) and spatial indirect (spillovers) components. The result confirms positive spatial dependence in the production of urban commercial banks. Additionally, productivity of China's urban commercial banks increases, which is mainly contributed to by the returns to scale change.

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.

Research on the Impact of Fintech on Liquidity Risk of Chinese Commercial Banks

This paper investigates the liquidity impact of fintech development on commercial banks with a sample of 18 Chinese commercial banks over the time interval from 2013 to 2022. This paper constructs a basic regression model, three models with the introduction of mediating variables, and a model for heterogeneity analysis. An empirical analysis in this paper begins by analyzing the overall trend of data by conducting a descriptive statistical analysis of the selected variables; in the second step, it is determined whether the selection of the variables is reasonable through the test of multiple covariance; in the third step, regression analysis is carried out on the data to determine the relationship between the variables; in the fourth step, it is determined through the mediation effect model whether FinTech will have an impact on the liquidity of commercial banks through the selected intermediary variable impact; subsequently, a heterogeneity analysis is conducted to determine whether there are differences in the nature of ownership and regions in the impact; finally, a robust-type test is conducted to determine whether the results of the regression analysis are credible. The results show that the liquidity risk of commercial banks is significantly reduced as fintech companies strengthen their interconnection with commercial banks. In addition, the net interest margin cannot be used as a mediating variable for FinTech to affect the liquidity of commercial banks, but the results of the empirical analyses of the non-interest income share present significant, i.e., there is a mediating effect. Finally, the heterogeneity analysis shows that the liquidity of urban commercial banks and joint-stock banks is more sensitive to the development of fintech, meanwhile, the liquidity of commercial banks in the southern region is more susceptible to the development of fintech. The article concludes with some recommendations to the Chinese government and relevant commercial banks regarding the promotion of FinTech development.

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

Financial Openness, Bank Systematic Risk, and Macroprudential Supervision

International experiences have underscored the dual implications of financial openness. Given China’s unique circumstances and its escalating level of financial openness, it is crucial to assess potential impacts on the country’s bank systemic risk. This paper uses the quarterly data of 37 listed banks in China from 2010 to 2022 to explore the relationship between financial openness and systemic risk of the banking system, the mechanism of action, and the moderating effect of macroprudential policy on the two. The findings indicate an inverted “U”-shaped correlation between financial openness and bank systemic risk. On one side of this shape, financial openness primarily exacerbates funding mismatch, thereby increasing the systemic risk of banks. Conversely, on the other side, it primarily alleviates systemic risk by optimizing capital management. Moreover, with the help of macroprudential supervision, the inverted “U”-shaped relationship between financial openness and bank systemic risk leads to a lower level of systemic risk and, at the same time, promotes the early arrival of the inverted “U”-shaped inflection point between financial openness and bank systemic risk. Notably, the impact of financial openness on the systemic risk of joint-stock commercial banks, urban commercial banks, and rural commercial banks is more significant. The above research results provide a regulatory reference for effectively preventing and resolving systemic risk while achieving high-quality openness to the outside world. In deepening financial openness, the banking industry needs to pay attention to the funding mismatch and the efficiency of capital management and implement differential risk supervision and prevention mechanisms for banks with different ownership, which is conducive to the reduction of bank systematic risk.

How can Chinese A-shared listed bank’s ESG activities affect their risk-taking?

The sustainable development of society has gradually been the world’s attention at all levels. At the 75th session of the UN General Assembly, the Chinese government said it would aim to peak carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060. All levels of government in China are also responding to the call, and how to promote green and sustainable development has become China’s top priority to achieve high-quality double reduction goals. As a banking-led prosperous economy, how to implement the Environmental, Social, and Corporate Governance (ESG) concept in the banking industry has become the most important to achieve the double reduction goal of quality and quantity in China. In recent years, the CBRC and the People’s Bank of China (PBC) have issued much guidance on transforming the banking industry through ESG. Considering that the number of A-share listed bank companies in China, especially the number of local banks (urban commercial banks and rural commercial banks), has increased in recent years, it is also considered that the existing research focuses on the relationship between ESG management and bank performance, and there is little analysis on bank risk. Based on the annual data of China’s A-share listed banks from 2018 to 2022, this paper uses regression analysis to explore the relationship between the implementation of ESG and bank risk-taking.

Study on liquidity risk of commercial banks

China’s banking system, a product of its planned economy, is a means for China to implement its economic and financial development and consolidate its role in the global economy. Recently, this system has been decentralised by adapting specific regulations to international standards. Against this backdrop, the development of inter-bank activities has played a vital role in the rapid expansion of Chinese banking sector’s assets. This study, uses data from 34 listed commercial banks between 2010 and 2018, to analyse the effect of interbank activities on commercial banks’ liquidity risk using a panel data model. This determines whether the effects are the same for different commercial banks. The study concludes that the expansion of interbank activities has increased commercial banks' liquidity risk, and that this effect is more significant in joint-stock banks than in urban commercial banks. Therefore, commercial banks should sensibly position their interbank development model, conduct their interbank business prudently and rationally, and continuously strengthen their risk control measures. The supervisory authorities must continue to strengthen supervision of interbank activities and prevent funds from being de-realised.

Fintech Helps the Bank of Changsha to Build An Ecological Banking Paradigm

The wind of science and technology has violently impacted the financial ecology and gradually overturned the traditional business model of commercial banks, so that banks have promoted fintech to a strategic height, in order to realize the multiplication of customer base, the doubling of benefits and the doubling of cost. In addition, the traditional lending financial model has been out of time, and what customers need is no longer breakpoint services. People's daily life and business behavior of enterprises have already been networked and systematized, which has become a node on the whole social ecological network, and financial services must be platform and ecological. In this context, The Bank of Changsha has made rapid countermeasures. On the basis of always focusing on the "three positioning" of urban commercial banks, it puts forward the development concept of building financial tech ecology, local living ecology, industrial investment ecology, industrial investment banking ecology and market investment ecology. Under the guidance of precise strategy and clear system, the construction path of ecological bank has become more clear, and the balanced growth of operating value, quality and scale has been realized, and the business structure has been continuously optimized. This paper analyzes the specific measures of the Bank of Changsha, and puts forward some suggestions for the construction of ecological bank, in order to have certain reference value for small and medium-sized banks to break through the difficulties.

Comparative Analysis and Influencing Factors of Comprehensive Competitiveness of Urban Commercial Bank in Jiangsu and Zhejiang Areas

In the fierce competition of the market economy, it is difficult for small and medium-size enterprises (SMEs) to obtain enough financing, which affects their further development, and urban firms can help them. This paper selects several urban business firms in Jiangsu and Zhejiang regions, compares their comprehensive strength and explores the influencing factors, and draws the conclusion that the economic development level, government policies, the positioning of banks and strategic investors will all have an effect on the comprehensive strength of urban commercial banks. This paper also gives some suggestions that the government should be more responsible to regulate the urban banks, banks should choose whether to need strategic investors according to their own conditions, and the urban commercial banks should insist on providing financing services for small and medium-size companies, so as to promote the coordinated development of regional finance.

A Study on Risk Management of Commercial Banks’ Home Mortgage Loans Based on Risk Management Framework

Abstract In the wave of global urbanization, the rapid development of the real estate industry has greatly driven the growth of personal housing loans of commercial banks, and personal housing loans have become a very important part of the loan business of commercial banks, especially in the business operations of many smaller urban commercial banks, where personal housing loan business is an important source of profit. However, the personal housing loan business is facing increasing risk management challenges against the multiple backgrounds of the current epidemic environment, the overall tightening of mortgage policies, and the accelerated advancement of market-based interest rates. For most urban commercial banks, personal housing loan risk control should be based on the local market, combined with the actual development of the enterprise itself, comprehensive internal and external environmental conditions to establish a perfect risk control mechanism and timely improvement of the existing management problems is a top priority. This paper takes Bank H as an example to study the risk management of personal housing loans, exploring the basic performance of Bank H in terms of personal housing loan risks, analyzing the factors affecting its housing loan risks, and the current problems in the management of personal housing loan risks. A linear regression model is also constructed to analyze the causes of Bank H’s housing loan risk, the factors affecting personal housing loan risk, and the characteristics of Bank H’s housing loan risk. The experimental results of this paper show that through risk control management of the 10 indicators selected, Bank H’s annual housing non-performing loan ratio declined by 19.392% and was effectively curbed. It is inferred that effective financial risk management decisions can be an important tool for risk management in averting the risks associated with commercial bank housing loans. Therefore, a sound post-loan risk management mechanism for personal housing loans is essential and the only way to improve the resilience of commercial banks.

Fintech, bank concentration and commercial bank profitability: Evidence from Chinese urban commercial banks

This article empirically examines the non-linear relationship and moderating effect between fintech, bank concentration and commercial bank profitability using unbalanced panel data of 131 urban commercial banks in China from 2010 to 2021. The results show that the relationship between fintech and commercial bank profitability exhibits a non-linear relationship of inhibition followed by promotion. Bank concentration has a negative moderating effect on the impact of fintech on commercial bank profitability, and fintech has a crowding-out effect on banks' profits as bank concentration rises. The findings of this paper help to respond to the current debate on fintech and traditional banking.

Green gospel effect of regional financial expansion: evidence from urban commercial banks in China.

The regional financial expansion represented by the development of regional small and medium-sized banks, such as urban commercial banks, is an essential factor affecting the environmental behavior of enterprises. We found that both the marginal expansion and the scale expansion of regional finance help reduce the sulfur dioxide emission intensity and improve the environmental performance of enterprises, indicating a green gospel effect of regional financial expansion. In terms of the impact path, regional financial expansion cannot only reduce the sulfur dioxide generation intensity and improve the front environmental performance of enterprises, but also increase the sulfur dioxide removal intensity as well as improve the terminal environmental performance. However, in the context of high fiscal pressure on local governments, regional financial expansion exacerbates sulfur dioxide emission and generation intensity of enterprises, worsening environmental performance and creating a green curse effect. Further study finds that the cross-regional expansion of urban commercial banks can strengthen the green gospel effect; the improvement of enterprises' environmental performance by regional financial expansion is mainly found in polluting industries and non-SOEs.

Internet Finance and Risk-Taking of City Commercial Banks: Evidence From China

China’s urban commercial banks are more likely to face risks with the rapid development of Internet finance. However, few studies unfold the impact of Internet finance on the risk-taking level of urban commercial banks and explore their role path in depth. To study the relationship between the two and their path of action, this paper takes 62 city commercial banks in China from 2011 to 2020 as research objects and makes empirical tests by Stata. The intermediary effect model is used to study its impact path from the perspectives of assets, liabilities, and intermediate services. The conclusions are as follows: (1) Internet finance aggravates the risk-taking of urban commercial banks; (2) This effect shows heterogeneity in listed and non-listed, trans-region and non-trans-region urban commercial banks; (3) Net interest margin, debt structure, and non-interest income show the mediating effect when Internet finance affects the risk-taking of urban commercial banks. The results are beneficial for urban commercial banks to change their business strategies with their characteristics and achieve sustainable and healthy development.

FinTech development and commercial bank efficiency in China

The rapid development of financial technology (FinTech) is challenging the business of commercial banks. This research analyzes the impact mechanisms of FinTech on the efficiency of commercial banks in China, drawing from the principles of consumer theory, disruptive innovation theory, and technology spillover theory. We apply the DEA–Malmquist model to calculate the total factor productivity of 74 commercial banks from 2012 to 2019 and utilize the text mining method to construct the FinTech development index during the same period. Finally, this study investigates FinTech's effects on commercial bank efficiency in China through the dynamic panel-generalized model of moments. The results show the following. First, FinTech development reduces the commercial bank efficiency for the overall effect. Second, its development affects the debt side of commercial banks, which becomes less efficient because of the rising debt cost. Third, various types of commercial banks are impacted differently by FinTech; urban commercial and rural commercial banks are the most influenced by FinTech, while joint-stock banks are the least influenced. Fourth, regional commercial banks are impacted more by FinTech, with those in the east region more affected. The research conclusions offer theoretical and practical values for deepening the reform of commercial banks and for developing and applying FinTech.