THE IMPACT OF CREDIT RISK ON THE PERFORMANCE OF CHINA CONSTRUCTION BANK

Abstract

The banking environments in China are more diversity, even though the economic is growing up than before, seems everything goes well. Actually the commercial banks' credit risks are high. High credit risk of commercial banks has seriously threatened the sustained and steady development of our economy. So in-depth analysis of the influence towards credit risk of commercial banks is important practical significance for solving the bank’s credit risk problem. This research is mainly examining the quantitative effect of credit risk on the performance of one commercial bank in China from year 2010 to year 2016. This research used the secondary data of China construction bank. And the data to do the analysis is obtained from the bank's annual report. Return on assets as the dependent variables are used to measure the performance of the bank which measured by: non-performing loans, inflation rate, GDP and bank size. In this research, the multiple linear regression models will be used to measure the relative weighting of the independent variables (non-performing loans, inflation rate, GDP and bank size) above on a dependent variable (return on assets). Basic descriptive statistics was applied for trend analysis. As a result, the research concluded that NPL, IR and SIZE have a significant relationship with performance of China construction bank; but there is no significant relationship between GDP and China construction bank.