An Analysis of the Impact of Financial Deleveraging on the Financial Business of Commercial Banks

Abstract

Chinese commercial banks, in order to tide over the financial crisis since 2008, began to develop high-yield financial business which nonetheless brings high risk, and the high-speed process of financial leverage makes the problem of commercial banks' capital from real to virtual more serious. To prevent the recurrence of financial crisis, China started the process of financial deleveraging in 2016. In this paper, firstly, the current situation of domestic commercial bank financial leverage is described starting from the definition of financial leverage and commercial bank financial business; then the relationship between financial leverage and commercial bank financial business is studied, and finally, empirical analysis is made on the impact of financial deleveraging on the financial business of commercial banks through the financial econometric model.