An Empirical Study on the Impact of Financial Regulatory Indicators on the Non-Performing Loan Ratio of Commercial Banks in China
DOI:
https://doi.org/10.54097/ajkqka33Keywords:
financial regulation, non-performing loan ratio, commercial banks.Abstract
A high non-performing loan (NPL) ratio in commercial banks reduces banks’ profits, weakens their profitability, and triggers market concerns about bank stability and reputation. For the broader economy, excessive non-performing loans may cause credit contraction, disrupt the normal functioning of financial markets, and restrain economic growth. The NPL ratio of commercial banks is affected by both macroeconomic and microeconomic factors. From the perspective of financial regulatory indicators, this paper investigates the impact of selected indicators on the NPL ratio of commercial banks. After reviewing domestic and international research progress, the paper provides a comprehensive analysis of the NPL ratio of Chinese commercial banks over the past decade, including overall trends, structural distribution, and differences across institutions. It then conducts theoretical analysis and selects data from 16 banks for panel data analysis to empirically examine the effects of provision coverage ratio, return on assets, loan-to-deposit ratio, and capital adequacy ratio on the NPL ratio. The results show that financial regulatory indicators have significant effects on the NPL ratio.
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