Does Cross-industry Loan Diversification Reduce Bank Systemic Risk?Evidence from Listed Banks in China
Banking plays a crucial role as the most significant financial intermediary in China's financial system,and the effectiveness of its diversifi-cation strategy is a significant topic in both theory and practice.Our research findings reveal a significant positive correlation between cross-industry loan diversification and bank systemic risk,indicating a clear"diversification systemic risk"effect.Further research indicates the influence of cross-industry loan diversification on bank systemic risk operates primarily through the channel of interbank asset similarity.Additionally,we find the"diversification systemic risk"effect is particularly prominent among joint-stock banks,banks with high interbank deposits and high real estate loans.This study holds important reference value for the ongoing reforms and practices in China aimed at controlling and preventing bank systemic risk.
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