Economic Analysis Of The State-Owned Commercial Banks' Compensation System Against A Background Of Finance Openness

There are both more opportunities and more challenges for China's banking industry in 21st century. China joined the World Trade Organization in November of. 2001, and the government promised to open the domestic financial market completely by 2005. Entry into the WTO will stimulate further participation by foreign banks in China's banking industry and drive up the level of competition among domestic and overseas banks. As the knowledge-based service is becoming the primary source of the steady and remarkable profits, human capital will turn out to be the most valuable fortune in the banks. And the competition is likely to focus on this aspect.There are a lot of researches and theories on human capital and human resource management overseas. The researches specialized in the banks are not so many, as they had been included in the enterprises' human resource management. In China, bank is different from the common enterprise in many aspects, and related researches have been made in recent years.This thesis analyzes the state-owned commercial banks' compensation system against a background of finance openness. Finance openness is the necessity of Chinese economic development. With finance openness, the state-owned commercial banks must reform in some aspects, if they want to emulate their foreign counterparts in international best practice. And the reform in the compensation system is one of the most important ones. The plan of the thesis is as follows. Part one analyzes the economic environment which China's banking industry is faced with, and points out that human capital is one of the focuses of banking competition. The second part reviews the theory on human capital and human resource management. Having analyzed the cost and income of human capital in the bank, the third part of this thesis indicates the compensation system is most important, and points out the system failure in human resource management of the state-owned commercial banks after comparing with foreign banks. Then part four brings forward a series of reform directions. The fifth part discusses the stock option's realistic meanings and obstacles as a way of compensation. The last part summarizes the thesis and restates the writer's3point of view.In the analysis course of this thesis, the writer connects the competition ability of the bank with the costs and the effect of the compensation, and analyzes the compensation system as an internal variable. Then the human capital competition is upgraded in a quite high level. There are a great deal of data cited and a series of comparisons in this article. After analysis, the writer affirms the advantages and disadvantages in compensation system of the state-owned commercial banks, and puts forward some relevant opinions. Now the foreign banks have not entered China on a large scale, and our state has not opened the financial market completely. So some hypotheses and viewpoints advanced here may be different from the realistic practice and the future fact.Thanks experts and teachers for giving advices and pointing out the mistakes.