The Market For Corporate Control Mechanisms On The Internal Governance Of Chinese Commercial Banks

On the issue of control circulation such as merger and acquisition of commercialbank, the existing researches were mostly limited to the facet of the management ofcommercial bank, concerning about the possible influence of control transaction onthe management performance of commercial bank. Although part of researchers hasrecognized the value of control market in the governance of commercial bank, theystill took bank control market as a kind of countermeasure and recommendation,paying no attention on the deep analysis of this issue.The topics of this paper is to analyze the phenomenon of the present controlmarket transaction of Chinese commercial banks being increasingly active from aholistic view, and to discuss the effects and influences of bank control market inChinese commercial bank governance. On the base of summary of the theories ofcontrol market and commercial bank governance, this paper will take a comparativestudy about the situations of control markets of commercial bank in world majorcountries, and sums up the problems existing in control markets of Chinese banks andthe future possible developing directions. Besides, this paper will also offer somecountermeasures and recommendations against the problem of institutionalbottlenecks, to make the regime of control market play a more important role inChinese governance practice of commercial bank.In the main structure, there are four parts which are expanded actually, includingthe particularity of the commercial bank governance and the value of the controlmarket mechanism, the basic mode of commercial bank governance and the evolutionpath of the control market mechanism in variable countries, and empirical studies ofthe mechanism of the governance tool. In fact, a meticulous internal logic existsbetween the various parts above.The first part defines the explicit object of study, and provides the theoreticalbasis for further research. The second part furtherly clarifies the factors andmotivation which is closely correlated with the development of bank control market, through the country comparison analysis. Through the analysis of this part, the twofollowing conclusions are cleared. First, during the bank governance practices indifferent counrtries, the control market is conducive to the improvement ofgovernance performance of banks and industry as a whole; Second, in differentcountries, although there are some differences about the motivation and the focus ofthe bank control market development, the following three aspects are stillconcentrated overall, including the structure of competition in the industry, the banks'internal governancestructure, and the changes of the external institutionalenvironment. Undertaking the above, the third part combinly uses the short-andlong-term performance evaluation method to analyze and validate the control marketperformance of the Chinese banking sector. The fourth part implements a in-depthanalysis to disclose the relationship between the performance improvement and theinner governance mechanism in commeracial banks.The conclusions indicate that the control market mechanisms over commercialbanks governance in China does exist a significant performance boost effect. And theeffect above in joint-stock banks is overall superior to the four state-owned banks. Inaddition, the multiple regression analysis shows that the effect of the control marketmechanism depends on the necessary adjustments of internal governance structure inthe target banks, such as, management of the bureaucracy, the board of supervisors,and the fundamental ownership structure. And only through the conduction of themechanism above, the corresponding effect of the control market mechanism can berealized. Therefore, the weak governance performance of the four state-owned banks,reflects the rigid factors exist in the process of the internal governance structure...