Economic growth targets and bank risk exposure: Evidence from China

被引:6
作者
Liang, Quanxi [1 ]
Huang, Jinlan [1 ]
Liang, Mingjun [1 ]
Li, Jingxiang [1 ]
机构
[1] Guangxi Univ, Sch Econ, Nanning, Peoples R China
基金
中国国家自然科学基金;
关键词
Economic growth targets; Bank risk exposure; Commercial bank; Credit allocation; PERFORMANCE; INCENTIVES; POLITICIANS; MANAGEMENT; TURNOVER; LEADERS;
D O I
10.1016/j.econmod.2024.106702
中图分类号
F [经济];
学科分类号
02 ;
摘要
Managing growth targets to maintain economic growth is a common practice worldwide. Using data of local commercial banks over the period 2003 to 2019, we examine the effect of local economic growth targets on the risk exposure of commercial banks in China. We find that local economic growth targets are positively associated with bank risk exposure. This relationship is more pronounced in (1) state-owned banks and those with executives having stronger promotion incentives, (2) provinces with politicians at critical stages for promotion, lower marketization, and lower growth potential, and (3) periods with bleak economic outlook and greater economic policy uncertainty. We further discuss two possible channels through which growth targets affect bank risk: the credit allocation channel and the credit quality channel. Our study sheds new light on the potential costs associated with local governments' efforts to stabilize economic growth from the perspective of bank risk exposure.
引用
收藏
页数:16
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