The Corporate Governance Model Of PRC Commercial Banks

The commercial banks are the core of Chinese financial business, whose smooth and efficient operating is highly correlated with the national economy development and stabilization. To establish good corporate governance is the microscopic foundation of modern market economy system which could operates in a order and highly effective way. The theory and practice of corporate governance is increasingly emphasized both in the domestic and foreign countries, and to strengthen the corporate governance of the state-owned banks is of great urgency.In the practice of the development of global corporate governance structure, there are two models. The first one could be labeled as "British and American" model, of which the shareholder structure is relatively dispersive and external supervision plays a key role. The second one could be called "German and Japanese" model, of which the shareholder structure is more concentrated and internal supervision have more impact on the system compared with the first one. Both the models have their advantages and disadvantages, and they do play their roles effectively given their specific operational environment. Currently these two models have the trend to merge with each other in some degree to enhance the effectiveness and reduce the agency cost, which means one's weaknesses could be overcame by acquiring the other's strong points.Considering the good experience from international banks and all the advantages and disadvantages of the two models, the Chinese commercial banks should apply an "Integration Corporate Governance" with Chinese characteristics. At the beginning, the banks should take bank-oriented model as first priority and market-oriented as supplementary due to the "follower advantages". In the middle process, these two models should be used evenly and developed comprehensively for "smoothly transited" purpose. Finally the bank-oriented model should be replaced by the market-oriented one to achieve the long-term stabilization. The ultimate purpose is to transform Chinese commercial banks into the first tier international banks with decent corporate governance.This article first introduces the core concepts and fundamental principles of...