Bank Resilience and Risk-Taking Behavior: Evidence from Commercial Banks in China

Yao Wu, Yincheng Li (), Zixuan Zhou, Yiran Ji (), Linjie Fu and Rui Zhang
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Yao Wu: Bank Sinopac (China) Ltd.
Yincheng Li: Macau University of Science and Technology
Zixuan Zhou: Macau University of Science and Technology
Yiran Ji: Macau University of Science and Technology
Linjie Fu: Macau University of Science and Technology
Rui Zhang: Shanghai Pudong Development Bank

A chapter in IEIS 2023, 2024, pp 24-35 from Springer

Abstract: Abstract Due to external adverse shocks such as COVID-19 and the Russia-Ukraine war, bank resilience is a vital measure used to defend against risk-taking. Using annual data from 42 listed commercial banks in China over the period 2013 to 2022, the study employs the Z-score as a dependent variable to measure risk-taking and the bank resilience index as an independent variable to measure capability to defend against bank risk-taking. In addition, the study adds bank-specific factors of bank size, net income margin, inefficiency, ratio of loans to deposits, cash flow, and diversification as control variables into the regression model. The empirical results of the study show that bank resilience could lower risk-taking, and bank size has a promoting effect on the relationship between bank resilience and risk-taking. As for heterogeneity analysis, banks with high-BRI have greater capability to defend against risk-taking than banks with low-BRI. Furthermore, the bank resilience of non-state-owned banks could reduce risk-taking, while state-owned banks have no impact of bank resilience on risk- taking.

Keywords: Bank Resilience; Risk-taking; Capital Ratio; Asset Quality (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/978-981-97-4137-3_3

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