An empirical research on risk factors identification in scale expansion of China commercial banks

With the development of China´s economy, China banking shows obvious trend of scale expansion behind which there is latent risks. Based on the analysis of current scale expansion of China commercial banks, this paper selects eight indicators such as the value of economics of scale, GDP, M1/M2, Return on Equity (ROE) and NPL ratio as the risk factors of scale expansion of China commercial banks. These indicators come from three aspects including effects of scale expansion of China commercial banks, the condition of Macroeconomics and the operation of China commercial banks. The empirical test demonstrates that these eight indicators, particularly the value of economics of scale, have marked impact on the risks of China commercial banks. The innovation of this paper is that it takes the value of economics of scale as one indicator reflecting the effects of the scale expansion of China commercial banks and it is included in the risk factors model in scale expansion of China commercial banks.