The nonlinear relationship between banks competition and financial stability in China

We use difference GMM method to investigate the influence of banks competition on financial stability in China. The result shows there is an optimal competition level for China's banks system. The stock market disaster in 2015 does not have significant influence on the z scores of banks, but it caused the non-performance loans increase evidently. This may be the results of China's separate supervision and separate operation of financial system. Appropriate competition level is essential for China's banks system.