Research On Corporate Governance For China's State-owned Commercial Banks

To crack down the hit from the international financial crisis, the central government determined to launch the expansionary fiscal policy and loose monetary policy to stimulate domestic demand, and the credit assets of the commercial banks grew rapidly. Commercial banks helped the national economy stabilizing and recovering, while accumulated a number of problems themselves. Weak management and governance structure of commercial banks can finally lead to savings and credit crisis, so that the government pays heavy cost, while a complete corporate governance structure would offer the bank a good return, therefore the commercial banks should pay attention to the improvement of corporate governance. Compared with foreign banks, China's state-owned commercial banks lag behind in the corporate governance structure, asset quality, capital, profitability, innovation and so on, and it is necessary to narrow the gap through improving competitiveness, which needs the Chinese state-owned banks to improve the governance structure of banks.From the current situation of China, China's state-owned commercial banks are the main entity of the financial industry, and their development and reform is closely related to stability and security of the country's economy and financial industry, also, the management of the banks is key to the system of the state-owned commercial banks. Therefore, we should strengthen the research on the governance of state-owned commercial banks, learn from management experiences of the major foreign commercial banks, and improve the management of state-owned commercial banks in the country, which are of great significance in the commercial banks'establishment of modern enterprise system, facing the challenge of foreign banks, and preventing and defusing financial risks.The article discussed the theoretical basis of management of state-owned commercial banks, analyzed the particularity of the management of the commercial banks, and concluded the general framework of the management of commercial banks. Via the comparison with the Anglo-American model and German-Japanese model, the article summarized the similarities and differences of two modes, and pointed out that the state-owned commercial banks in China should build the governance structure consistent with its national conditions, when refer to the successful experience of foreign commercial banks.In the fourth part of this article, data in the Annual Report 2004-2009 of the country's four biggest state-owned commercial banks were selected to prove and study the relations between bank performance and equity characteristics, board of directors and board of supervisors, and pay incentives. The study results show that negative correlation is between ownership concentration and bank performance, while positively correlation is between the proportion of the other shareholders and bank performance. Board size, proportion of independent directors and the proportion of executive directors did not pass the significance test, the scale of the Board of Supervisors passed significance test, the regression coefficient is positive, indicating that positive relation is between supervisory board size and bank performance. The proportion of staff supervisors did not pass the test of significance, indicating that staff supervisors did not play its due role. Therefore, China should improve the board of the directors, board of supervisors to ensure a sound banking management mechanism. The article also made the empirical analysis on the relation between staff costs, net profit, return on net assets, non-performing loan ratio and capital adequacy, showing that commercial banks'employees'pay levels have been linked with bank performance, employee compensation and net profits, return on assets, capital adequacy rates are positively correlated, indicating that performance of bank contact with staff salaries; staff salaries and non-performing assets were significantly negative correlation, indicating that controlling bank risk effectively is helpful to increase the salaries of their employees, and it has become the important content to measure employees'performance and reward.Finally, this article put forward policies about internal governance and external governance on improving the state-owned commercial banks. In the internal governance: improve internal governance structure of state-owned commercial banks to form a reasonable checks and balances within the internal interest; introduce foreign strategic investors to optimize the structure of property rights; establish long-term effective incentive and restraint mechanisms to optimize the allocation of human resources; and improve the internal control system. External governance: nurture professional manager market; develop capital markets; improve laws, regulations, strengthen external oversight; perfect market environment for fair competition, build a sound social credit system.