State-owned Commercial Banks, Governance Structure And Analysis Of Mechanisms

After China enter WTO, Chinese banks will compete with the international banks. So it is very important for us to reform the corporate governance and distribution system of Chinese banks. The nature of building a good corporate governance is to have the maximization value of the firm. The corporate governance is divided into two parts, one is corporate controlling frame, the other is the incentive issue. The former can guarantee the balance of each stock holder and the manager's operation under the supervision of the owners. The latter can build a competitive incentive issue and coordinate the interests of the employees and employers. It can also attract talented people to stay in the firm. An excellent distribution system is part of the corporate governance.The article begins with the possibility of the reform of Chinese state-run banks. After describing the shortcomings in corporate governance of Chinese state-run banks, it points out the meaning of building an effective corporate governance, how to build it, and the outside environment that it needs.On the basis of the theory of common corporate governance and broad distribution system, the particle points out how to design the distribute system of Chinese state-run banks. The most important of it is the incentive issue of the executives. In the end, it analyses two kinds of forward income or unfixed income; Stock Options and Employee Stock Owner Plans.