Burden or Benefit:How Minimum Wage Policies Affect Credit Risk in Urban Commercial Banks
Using data from 124 urban commercial banks in China between 2006 and 2021,this study employs a treatment effects model to empirically investigate the impact of local govern-ment increases in provincial minimum wage standards on the credit risk of urban commercial banks.The results indicate that although the"benefit effect"of minimum wage increases exceeds their"burden effect,"the overall impact of the burden effect is greater due to the banks'asset structure,which is characterized by a higher proportion of corporate loans and fewer retail loans.Consequently,minimum wage policies,overall,tend to exacerbate the credit risk of urban com-mercial banks.At the macro level,the rising economic policy uncertainty intensifies the impact of minimum wage policies on these banks.At the micro level,optimizing retail transformation and in-creasing the proportion of retail loans in asset allocation can help banks withstand the shocks from minimum wage adjustments.Further research suggests that local governments can mitigate the ad-verse effects on urban commercial banks'credit risk by adopting strict regulatory measures,re-ducing taxes and fees,stabilizing growth,or enhancing the independence of minimum wage adjust-ments.It is recommended that urban commercial banks actively pursue retail transformation to prepare for potential future shocks;additionally,local governments should enhance the independ-ence of minimum wage adjustments and implement reasonable policy combinations.
NETL
NSTL
万方数据
