Abstract: It is an important aspect of preventing and controlling financial risks and improving the efficiency of fund allocation to accurately identify the implicit guarantee of city commercial banks. Based on the data of inter-bank deposits issued by Chinese city commercial banks from 2014 to 2021, this paper uses the interest rate difference method and the dummy variable method to measure the implicit guarantee level of city commercial banks, and analyzes the evolution of the implicit guarantee of city commercial banks in combination with the bankruptcy event of Baoshang Bank in 2019. The results show that the implicit guarantee can reduce the financing cost of city commercial banks by about 60%. The distribution of the implicit guarantee of city commercial banks is negatively correlated with the rating of city commercial banks and positively correlated with the local government fiscal resources, that is, the lower the rating and the higher the local government fiscal resources, the higher the implicit guarantee level will be. The mechanism analysis reveals that the formation mechanism of implicit guarantee mainly depends on the risks of city commercial banks and the ability and willingness of local government to guarantee. After the bankruptcy event of Baoshang Bank, the implicit guarantee of city commercial banks has been significantly weakened, and this impact is different due to the government’s willingness and ability to guarantee and the different risks of city commercial banks. Therefore, it is suggested that city commercial banks should strengthen the construction of risk early warning system, actively introduce strategic investors and optimize equity structure. It is also suggested that the government departments should optimize the credit rating of city commercial banks and strengthen the role of the third-party institutions in information disclosure.

Key words: city commercial banks, interbank deposits, interest margin, implicit guarantee, bankruptcy of Baoshang Bank