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The impact of off-balance-sheet regulations on bank risk-taking: Evidence from China

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  • Zhang, Qingjun
  • Chen, Si
  • Jin, Yi

Abstract

The release of new asset management rules has played a positive role in regulating the asset management business of financial institutions, preventing and controlling financial risk. It has also had an important impact on the management of banks’ off-balance-sheet (OBS) innovation. This paper uses unbalanced panel data on 75 commercial banks in China from 2007 to 2017 and combines a theoretical and an empirical model to study the development of bank OBS innovation and bank risk taking from the perspective of new asset management regulations. The analysis finds (1) the rapid development of OBS innovation will increase bank risk taking and (2) the solution to the problem of rigid payment is conducive to reducing the risk taken by Chinese commercial banks when providing OBS innovation.

Suggested Citation

  • Zhang, Qingjun & Chen, Si & Jin, Yi, 2020. "The impact of off-balance-sheet regulations on bank risk-taking: Evidence from China," Research in International Business and Finance, Elsevier, vol. 54(C).
    • Handle: RePEc:eee:riibaf:v:54:y:2020:i:c:s027553192030310x
    DOI: 10.1016/j.ribaf.2020.101297
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    References listed on IDEAS

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    6. Laeven, Luc & Levine, Ross, 2009. "Bank governance, regulation and risk taking," Journal of Financial Economics, Elsevier, vol. 93(2), pages 259-275, August.
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    Cited by:

    1. Jin, Yi & Gao, Xin & Li, Donghui, 2022. "The effect of individualism on bank risk and bank Performance: An international study," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 80(C).

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    More about this item

    Keywords

    Rigid payment; OBS innovation; Risk-taking;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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