• ISSN: 2010-023X
    • Frequency: Bimonthly
    • DOI: 10.18178/IJTEF
    • Editor-in-Chief: Prof.Tung-Zong (Donald) Chang
    • Executive Editor: Ms. Cherry L. Chen
    • Abstracting/ Indexing:  ProQuest, Crossref, Electronic Journals Library , EBSCO, and Ulrich's Periodicals Directory
    • E-mail: ijtef@ejournal.net
IJTEF 2018 Vol.9(3): pp. 131-134 ISSN: 2010-023X
DOI: 10.18178/ijtef.2018.9.3.602

Leverage Measurement and Multinational Comparison of Listed Commercial Banks in China

Yuxin Lin, Mingdong Cheng, Kengfung Wong, and Ho Jacko Cheung
Abstract—Based on the provisions of Basel III and the Method for Leverage Management of Commercial Banks promulgated by China Banking Regulatory Commission, this study measured various risk indicators such as leverage and non-performing loan (NPL) ratio of 15 listed commercial banks in China and compared the same type of data from several foreign commercial banks after the financial crisis. According to the NPL ratio data of the banks, the NPL ratios of major commercial banks in China were on an upward trend from 2011 to 2015. The ratio of major foreign commercial banks rose significantly during the financial crisis but declined after that. By comparing the trend of non-performing loans at home and abroad, we find that the trend of non-performing loans in China is similar to the eve of the financial crisis in the United States.According to bank leverage data, the level of leverage of most domestic banks in China at this stage is still under prudential regulation, though over-leverage exists in several banks. However, due to the widespread regulatory arbitrage, some of the businesses are not reflected in the bank's external and internal assets according to the actual risks. As a result, the official data may underestimate the real leverage of the banking industry.An important factor is the rapid development of shadow banking. The macro-prudential supervision policy is in its initial stage of implementation and is expected to control the risks of commercial banks in China in the future.

Index Terms—Leverage ratio, Basel III, macro prudential supervision, non-performing loan ratio.

Yuxin Lin, Mingdong Cheng, and Ho Jacko Cheung are with International School, Jinan University, China (e-mail: lucaslin1997@foxmail.com, 13927790257@163.com, jackocheung@qq.com). Kengfung Wong is with HKUST Business School, The Hongkong University of Science and Technology (e-mail: kenwongkengfung@163.com.).

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Cite: Yuxin Lin, Mingdong Cheng, Kengfung Wong, and Ho Jacko Cheung, "Leverage Measurement and Multinational Comparison of Listed Commercial Banks in China," International Journal of Trade, Economics and Finance vol.9, no.3, pp. 131-134, 2018.

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