Empirical Work on the Effect of Chinese Banking Competition on Bank Risk Based on GMM

There is a debate on the influence of banking competition on bank risk among the existing.Over the past30 years,competition among banks in China has significantly changed,but literature which put attention to the relationship between banking competition and bank risk is scarce.Using annual reports from 2000 to 2012 of 14 commercial banks in China,the relationship between banking competition and bank risk is tested.It is found that relationship between banking competition and bank risk is U shaped and that there exists a threshold of banking competition.When the strength of banking competition is above the threshold,there is a positive relationship between banking competition and bank risk,on contrary,it' s negative.