Market-Based Disposal of Non-Performing Assets and Liquidity Creation in Local Commercial Banks
Local commercial banks play a pivotal role in supporting regional economic development,but the deteriora-tion of their asset quality can trigger severe financial risks.Against this backdrop,market-based disposal of non-performing as-sets(NPAs)has emerged as an effective tool for mitigating risks,gradually improving financial institutions'asset quality and risk management capabilities,and thus becoming a crucial means of maintaining financial stability.This paper selects panel data from 134 local commercial banks in China from 2011 to 2022 to empirically investigate the impact and mechanisms of market-based disposal of NPAs on bank liquidity creation.The results indicate the following:Firstly,market-based disposal of NPAs significantly promotes bank liquidity creation,and this finding remains robust after ad-dressing potential endogeneity concerns and conducting several robustness tests.Secondly,market-based disposal of NPAs positively influences bank liquidity creation by mitigating risks associated with credit supply and boosting credit demand from the real economy.Thirdly,across different dimensions of liquidity creation,market-based disposal of NPAs enhances both on-and off-balance-sheet liquidity.Finally,heterogeneity analysis reveals that from the perspective of internal risk management,the promotion of liquidity creation by market-based disposal of NPAs is more pronounced in banks with lower capital adequacy ratios and smaller asset sizes.From the perspective of external risk environments,the positive effect on liquidity creation is also more evident in banks operating in regions with higher fiscal pressure and lower levels of overall industrial upgrading.This paper offers a new research perspective for comprehensively evaluating the impact of market-based disposal of NPAs,expanding the scope of research on how NPA disposal affects the behavior of microeconomic entities.Building on this,the study reveals the potential mechanisms through which NPA disposal promotes bank liquidity creation from both the supply and demand sides of credit,considering the different roles NPA disposal plays in the financial system and the real economy.The research findings provide insights into the internal logical relationship between the development of NPA disposal and the enhancement of the quality and efficiency of financial services for the real economy,offering theoretical support and policy im-plications for guiding small-and-medium-sized financial institutions in reforming and managing risks.
NETL
NSTL
万方数据
