COVID-19 EFFECT: THE IMPACT OF CREDIT RISK AND LIQUIDITY RISK ON COMMERCIAL BANKS' PROFITABILITY
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This paper seeks to investigate whether the impact of credit risk and liquidity risk on the profitability of Chinese commercial banks has changed as a result of the covid-19. To this end, we adopted financial data and indicators for a total of 32 Chinese listed commercial banks from 2009 to 2021 and conducted an empirical analysis using a fixed-effects model. Our empirical findings suggested that covid-19 strengthened the negative impact of credit risk on profitability, with the most significant effect on city commercial banks and a significant effect on ROA only for joint-stock commercial banks, while it has no significant effect on state-controlled large commercial banks. We also find that covid-19 weakened the positive effect of liquidity risk on profitability, but it has a significant effect on ROA only for joint-stock commercial banks. This study provides evidence of the impact of the epidemic on commercial banks, enabling them to manage risk well and improve their risk tolerance in the post-epidemic era, as well as providing empirical evidence for future research.