Research On Improving Corporate Governance Of State-owned Commercial Banks Of China

Chinese state-owned commercial banks which maintain a lifeline of the national economy and economic security are the mainstay of Chinese financial industry and also at a pivotal position in Chinese economic and social development. With full support from the country, Bank of China, China Construction Bank, Industry and Commercial Bank of China, the three state-owned commercial banks have implemented a reform of the shareholding system and successfully built the basic framework of modern corporate governance. The banking corporate governance mechanism is obviously improved, and the long-term existence of some deep-seated problems initially has been resolved. However, this is only the results of the reform under the leadership of the government. The gap between three main state-owned commercial banks and other advanced international banks is still very considerable in corporate governance structure, operational mechanisms and comprehensive competitiveness. Therefore, improving the corporate governance of Chinese state-owned commercial banks has become a key topic.The paper draws lessons from the relational theories on corporate governance and typical governance modes and discusses on principles, basic objectives and strategic selection of corporate governance for state-owned banks in China. Then it points out that the present positioning is the mode of state-owned holding joint-stock banks, and that the way of improving corporate governance for state-owned banks should be a step-by-step progress. Ultimately, the paper puts forward the general frame of improving corporate governance for state-owned banks, taking England-America mode as original version and acquiring the market mechanism from Germany-Japan mode, which divides the improving into internal governance and external governance and paves the exploring for following text. And the internal governance emphasizes authority balancing, incentive and restraint, information disclosure and risk controlling while the external governance emphasizes competitive, supervising, adjusting and credit mechanism. Considering the above frame as starting point, the paper analyzes the current situation and main problems within state-owned banks through qualitative methods from perspectives of both internal and external governance, by means of which it comes up with principles and measures and makes it prepared for proposing recommendations for internal and external governance of state-owned commercial banks.Finally, in terms of practice, the paper conceives series of conductional suggestions for improving corporate governance of state-owned commercial banks. As for internal governance, the measures are reducing principal-agent levels to cut off the cost of superfluous agencies, pulling in institutional investors to perfecting the ownership structure, founding special funds and forcing responsibility mechanism for directors, improving incentive system through multiple incentive modes, perfecting regulations of information disclosure to enhance transparency of operating and building risk controlling system to assure the security of risk management. As for external governance, the measures are perfecting laws system to enhance external supervision, building competitive market environment to perfect market restraint mechanism and cultivating healthy crediting culture.