Comprehensive Measure and Influential Factors of Fragility of Commercial Bank System in China

In order to comparing fragility index and the influential factors of State-owned Commercial Bank, Joint-stock Commercial bank, City Commercial Bank and Rural Commercial Bank, CAR, NPLR, ROA, ROE and C/D are chosen to make up fragility index of systems of the four commercial banks respectively by combination of FCE & AHP from 2001 to 2010 in this research. Influential factors of fragility analyzed by formatting multivariable linear regression model by Eviews 6.0, 17 indicators which stand for macroeconomic environment and financial environment are chosen to be as explanatory variables. Empirical results showing that fragility of State-owned Commercial Bank and City Commercial Bank are higher than other two types significantly at the beginning, but lower at the end. The systems of four commercial banks are stable since 2005. Comparing with macroeconomic environment indicators, affection from financial indicators is more significant. Specially, market concentration of banking industry, adjustment range of deposit reserve ratio, spreads between deposit and credit interest rate, assets market share of foreign banks in China indicate strong correlation with fragility of commercial bank system. It is necessary for us to provide the healthy financial system and environment to reduce fragility of commercial banks in China.