Research On Institutional Investors、Social Responsibility And Risk-taking Of Commercial Banks

The occurrence of the international financial crisis in 2008 has made the practical and academic circles realize that the global financial institutions are not only passively taking risks,but also actively taking risks of overload in pursuit of their own interests.Therefore,risk management is particularly important for financial enterprises.Affected by the sudden outbreak of the global COVID-19 epidemic in early 2020,the Basel Committee further strengthened its supervision over the global banking industry,delaying the planned implementation of Basel Ⅲ:Final Plan for Post-Crisis Reform from 2022 to 2027 by one year to prevent excessive risk-taking behavior.Therefore,the risk management of banking system is the focus of global attention.China pays great attention to the soundness of the financial system.General Secretary Xi Jinping has made many important statements on the improvement of corporate governance of financial institutions,which provides fundamental guidance for the study of this issue.At present,institutional investors have become the main force in corporate governance of commercial banks.Research on the impact of institutional investors on commercial banks’ risk-taking has aroused great repercussions.Up to now,no relative agreement has been reached on this issue,and the main arguments are "effective supervision hypothesis" and "strategic collusion hypothesis",indicating that there is still room and significance for further discussion on this issue.In recent years,the social responsibility of commercial banks has attracted great attention from the practical and academic circles.For a long time,commercial banks,as an important hub of financing,have been regarded as the key industries that affect social and economic activities.They should fulfill their social responsibilities as non-profit enterprises while maximizing their own interests.President Xi Jinping promised at the UN General Assembly that China will achieve carbon neutrality in peak carbon dioxide emissions by 2030 and in 2060,which will usher in a golden period of development for green finance and become a "new blue sea" for the strategic transformation of commercial banks.Inclusive finance focuses on the internal circulation of the economy,focuses on serving small,medium and micro-sized enterprises,and helps the poor precisely.With the Bank-Bank platform and community banks as the ties,it takes Kechuang Finance and Pension Finance as its characteristic businesses,effectively increasing the"Four Proportions".So when institutional investors actively participate in the corporate governance of commercial banks,will it affect the fulfillment of social responsibilities?Will the process of commercial banks fulfilling their social responsibilities affect the banks’ risk-taking behavior?Based on the above questions,this paper tries to explore the relationship between institutional investors and commercial banks’ risk commitment from the perspective of commercial banks’ social responsibility.The main research issues in this paper can be summarized into four levels:First,combing the existing literature,accurately defining the concepts of institutional investors and commercial banks’ social responsibility and risk-taking,and then reviewing the economic consequences of institutional investors,the direct economic consequences and the most fundamental motivation of commercial banks to fulfill their social responsibility,and the influencing factors of bank risk-taking,and on this basis,digging out the logical relationship among the three core concepts,and then finding out the breakthrough point for future research;Secondly,based on the classical economic theory and a series of basic theories such as principal-agent and stakeholders,the corresponding theoretical basis is found for the logical relationship of the three core concepts,and the current institutional background of our country is analyzed to provide corresponding situational analysis for the research of each logical relationship;Thirdly,this paper makes an in-depth theoretical analysis on the three issues of institutional investors and commercial banks’risk commitment,institutional investors and commercial banks’ social responsibility and the intermediary effect of commercial banks’ social responsibility,and puts forward corresponding assumptions.Fourthly,taking China’s listed commercial banks from 2009 to 2019 as the research object,this paper empirically tests the relationship between institutional investors and commercial banks’ social responsibility and risk commitment,and explores the impact mechanism and adjustment variables in each process.Through theoretical analysis and empirical test,the main conclusions are as follows.(1)Institutional investors as a whole have a positive effect on commercial bank risk taking,and this effect is restricted by capital adequacy ratio and return on total assets.Pressure-resistant institutional investors’ shareholding has a positive impact on commercial banks’ risk-taking.It pays attention to the long-term interests of banks and will focus on investment decisions and internal instability factors of banks.It can give full play to the corporate governance role of institutional investors and test the "effective supervision hypothesis" at the micro level.The pressure-sensitive institutional investors have a negative impact on the commercial bank’s risk taking.They focus on the short-term interests and fail to give full play to the role of corporate governance.Based on the principle of profit maximization,they have reached a "strategic collusion" with the management of commercial banks.Further research on different banks shows that institutional investors’ shareholding can disperse the ownership concentration of state-owned,joint-stock and city commercial banks,effectively supervise the decision-making of shareholders’ meeting,restrain the self-interest behavior of major shareholders,and reduce their risk-taking,but increase the risk-taking of rural commercial banks.(2)Institutional investors,as a whole,give full play to the governance role of stakeholders and have a positive impact on commercial banks’ social responsibility through selection,withdrawal and suggestion mechanism.The lack of potential commercial relationship between the pressure-resisting institutional investors and the banks they invest in,paying attention to the long-term interests of the banks they invest in,and significantly promoting the fulfillment of commercial banks’ social responsibilities;Besides the investment relationship,there is also a commercial relationship between the pressure-sensitive institutional investors and the banks they invest in,which pays more attention to the short-term interests and inhibits the commercial banks from fulfilling their social responsibilities.In addition,further research found that bank size plays a positive role in regulating the relationship between institutional investors and social responsibility;Institutional investors’ shareholding promotes shareholders’ and environmental responsibilities,inhibits customers’ responsibilities,and has no significant impact on employees’responsibilities.The influence of institutional investors’ shareholding on the social responsibility performance of different types of commercial banks is also different.It plays a catalytic role in city commercial banks and joint-stock commercial banks.However,this role is not significant in rural commercial banks and state-owned commercial banks.(3)Commercial banks’ social responsibility plays a negative intermediary role between institutional investors’ shareholding and risk taking.Specifically,the pressure-resistant institutional investors reduce the commercial banks’ risk commitment through the intermediary variable of commercial banks’ social responsibility;Pressure-sensitive institutional investors increase commercial banks’ risk-taking by suppressing their social responsibilities.Commercial banks’ social responsibility reduces banks’ risk-taking by improving bank performance,enhancing competitiveness and promoting economic growth.The main contributions of this paper are as follows:First,based on Carroll’s pyramid-shaped social responsibility system and Freeman’s stakeholder theory,and in combination with the definition of commercial bank performance evaluation index in the financial department of the Ministry of Finance’s newly released document "Measures for the Performance Evaluation of Commercial Banks"(Cai Jin[2020]No.124),a scientific and reasonable index system for evaluating the social responsibility of commercial banks in our country is established,which lays a foundation for subsequent empirical testing;Secondly,it enriches the research on institutional investors’ participation in corporate governance of commercial banks.This paper further expands the relevant research on corporate governance effect of institutional investors,taking the shareholding ratio of institutional investors in listed commercial banks in China as the research object,and discusses its impact on the risk-taking behavior of commercial banks;Thirdly,starting with the mechanism of commercial banks’ social responsibility,this paper explores the transmission mechanism of institutional investors’ risk commitment to banks,and provides a more fresh theoretical analysis framework and empirical evidence for this traditional research proposition,which is the most important theoretical contribution of this paper as a whole.Generally speaking,this paper firstly provides the policy basis for promoting the development of institutional investors in our country,especially qualified foreign institutional investors,aiming at different institutional investors to give full play to their respective advantages;Secondly,it provides a policy basis for commercial banks to actively assume social responsibilities.The theoretical and empirical content of this paper demonstrates that commercial banks can effectively enhance their own competitive strength,control earnings management,improve the relationship with the government while assuming social responsibilities.More importantly,it can control the risk-taking behavior of banks within a reasonable range,providing a new way of thinking for commercial banks’ risk management.