Variable	Proxy variable	Symbol	Calculation method
Bank risk-taking	Non-performing loan ratio	NPL	non-performing loans to total loans ratio (%)
	Loan allocation ratio	LLPR	Ratio of loan provisions to total loans (%)
	Z value	lnZ	$z_{i, t} = (r a_{i, t} + e k_{i, t}) / σ (r a_{i, t})$ . $r a_{i, t}$ is the average return on assets, $e k_{i, t}$ is the ratio of shareholders’ equity to total assets, and $σ (r a_{i, t})$ is the three-year rolling standard deviation of $r a_{i, t}$ based on periods $t$ , $t - 1$ and $t - 2$ .
Information disclosure	Information disclosure index	DIS	The disclosure situation of 20 items in BankScope is selected for measurement and defined as: $D I S = \sum S_{i} / 20$ , where $S_{i}$ represents the score of various information disclosure. If it is disclosed, it is denoted as 1; otherwise, it is denoted as 0.
Deposit insurance system	dummy variable	INS	Implementation of the deposit insurance system after 2015 takes the value of 1 and 0 otherwise.
Core explanatory variable	Value of franchise	BCV	$B C V = (R O E^{'} - r_{f}) / (1 + δ)$ , where ROE' is the pre-tax return on capital; $r_{f}$ is the risk-free rate of return and δ is the discount rate.
	Capital adequacy ratio	Cap	Equity capital to total assets ratio (%)
	Size of assets	Size	Natural logarithm of the Bank’s total assets (RMB100 million)
Variable of control	Loan-to-deposit ratio	LDR	loan-to-deposit ratio (%)
	Deposits to assets ratio	DAR	deposits to assets ratio (%)
	Interbank offered rate	IIR	Weighted average interbank lending rate (7 days) (%)
	GDP growth rate	GDPR	The national GDP growth rate is used for state-owned commercial banks and joint-stock commercial banks, while the regional GDP growth rate (%) is used for urban commercial banks, rural commercial banks and foreign banks.