Research On The Current Performance Of Local Government-controlled City Commercial Banks In China

Since the 90s of the 20th century, with the deepening of China's financial reform, as China's banking industry "third tier" of the city commercial banks have developed rapidly. City commercial banks in urban credit cooperatives, based on business by the city, residents and local financial investment shares consisting of joint-stock commercial banks. Its main task is it funds the development of the regional economy, especially in urban financial services for SMEs development. As the end of 2010, China had 147 city commercial banks, employing 206,604 people, the total assets of 7.8526 trillion yuan, after-tax profit of 76.98 billion yuan. City commercial banks'status and influence has been improved significantly.City commercial banks beginning from the establishment of a deep imprint on the local government mark. In 1995, the People's Bank of China issued the "Interim Measures of city commercial banks", in which twenty-three said: "Shareholders of city commercial banks by local enterprises, individual industrial and commercial households, city residents and local governments contributed capital composition. Among them, local government the largest shareholder, holding about 30% the proportion of a single legal person shareholder shall not exceed 10% stake, stake a single natural person can not exceed 2% of the total share capital. "This provision is a direct result of local government in the city commercial banks equity in the "dominance" of the dominant position. Since then, local governments holding on the impact of city commercial banks has been the focus of debate in the industry. How should we look at the city commercial banks and the relationship between local government controlled? Why should the local government controlled city commercial banks? Local government holding some city commercial banks is not conducive to development? This article will use the comparative method of analysis and empirical analysis of local government-owned commercial banks, the city study the impact of operating performance and to put forward their point of view, hope is in the transition period, reform of city commercial banks have some reference.The article is divided into six parts. First, we can find that the local government-controlled commercial banks, urban scholars have advantages and disadvantages of this problem have considerable differences, failed to form a consensus view. "Developmental" theory that the government can own the full grasp of the macroeconomic environment to encourage financial institutions lending to the private sector for market actors to act as information and transaction platform to facilitate the standardization of contracts and judicial proceedings related to the improvement and implementation. "Political" theory holds that the Government holds the ownership of private bank financing of "crowding out", although the government control of banks by the bank to finance the savings and capital accumulation has a positive effect, but the banks financing the project is not optimal, and the bank's operating efficiency would produce negative effects. Research focused on the domestic city commercial banks ownership structure is unreasonable; state-owned shares and legal person shares owned too concentrated; corporate governance structure is imperfect, not even the independent directors and external supervisors; incentives and other aspects of over-administration.Secondly, the article related to the ownership structure of the classical theory has combed. Include asymmetric information theory, principal-agent mechanisms and government-controlled commercial banks, the relevant theory. Currently, the state-owned commercial banks to commercial banks, corporate governance and efficiency of the relevant theory can be summed up in two different views:one is "grabbing hand", is a "helping hand." To the "grabbing hand" view of the scholars, the government shareholding commercial bank, bank managers only soft constraints, hard constraints do not exist and therefore can not fundamentally prevent fraud bank managers. This resulted in a "principal-agent" problem. To the "helping hand" view of the scholars, the state-owned commercial banks, development of commercial banks to maximize the benefits is to provide implicit guarantees for commercial banks.Again, the article on the status of China's city commercial banks had detailed analysis. As February 2011, China had 147 city commercial banks, city commercial banks total assets reached 7.7174 trillion yuan, up 32.2% over the previous year, representing total assets of banking financial institutions 8.0%. Total liabilities 7.2171 trillion yuan, up 32.2% over the same period, total liabilities of banking institutions accounted for 8.0%. Both quantity and size of city commercial banks in China's banking industry occupies an important position, and its influence is also rising. Second, people outside of city commercial banks and internal analysis of the distribution rights. Currently, the city commercial bank corporate governance does exist complicated situation. Issue is control of the external and internal distribution between the extremely unclear. This article made a specific analysis of this phenomenon. Third, through the city commercial banks and other relevant data from an objective point of view of the fact that the status of city commercial banks are compared. Specific practitioners and institutions from the number of assets, non-performing loans, capital adequacy ratio, net profit, assets, profitability, some city commercial banks loans to the proportion of the top ten customers in seven aspects of the study. The main business advantage is not obvious. Third, the asset structure of a single, higher rate of dependency on the traditional business, the middle slow business development, product innovation capacity is insufficient. Fourth, a higher concentration of loans, liquidity risks.Part of the fourth article of the local government the reasons for holding the city commercial banks. Includes six areas:Tax system reform on the local financial constraints, the limited capacity of local government finance, reasonable performance evaluation system of local officials, local government control of the weakening of state-owned commercial banks, city commercial banks to establish the historical origins and legal based on the concept of local government can not get rid of the old market-oriented ideas.The fifth article in a local government controlled part of the city commercial bank performance Empirical Study. China's domestic city commercial banks on most of the studies are about the governance structure of city commercial banks issue relatively little empirical research. This is mainly because the city commercial banks to establish soon, all aspects of management is not perfect, many not published annual reports of city commercial banks to obtain the required data is relatively difficult to study. For now, the published annual report of city commercial banks total number of city commercial banks accounted for only about half. Study of city commercial banks to some extent the lag has restricted the further development of city commercial banks. Through the establishment of three regression equations, the capital adequacy ratio, non-performing loan ratio, net profit, return on total assets of the four indicators of the regression. Including the proportion of independent directors, independent accounting supervisor, number of directors, the number of supervisors. Third, the macroeconomic indicators. Including city commercial banks Province per capita GDP, the market index. Fourth, other related indicators. Article set the four assumptions. Suppose 1 is the largest city commercial bank shareholders and bank performance inversely proportional. Assumption 2 is the city commercial banks and bank corporate governance performance directly proportional. Hypothesis 3 is the development of city commercial banks Province is proportional to the degree of bank performance. Suppose 4 is the state-owned commercial banks, city and state the proportion of corporate shares and bank performance is inversely proportional. Finally, the four empirical results obtained. First, the macroeconomic indicators on the performance of the city's largest commercial banks, which reflects the current stage of development of city commercial banks and the provinces where the level of economic development are closely linked. Second, urban commercial banks, city commercial banks ownership structure on operating performance is only a certain extent. Third, city commercial banks balance sheets reflecting the liquidity ratio and total assets of urban commercial banks have a more significant effect on performance. Fourth, corporate governance structure of city commercial banks operating performance of banks have no significant effect. As a result, accepted the assumption 3, rejected the assumption 2, part of the rejected hypothesis 1 and hypothesis 4.Finally, the paper presents the author's conclusions and policy recommendations. First of all, local government-controlled city commercial banks in the early development of city commercial banks are better than harm. This does not differentiate between stages, that any local government that the city commercial banks holding hundreds harm view is different. Second, city commercial banks depend on the operating performance of the economically developed provinces in which the degree of liquidity and asset size, and the relationship between ownership structures is not obvious. This partly explains the emergence of city commercial banks at this stage M & A flows and the phenomenon of cross-regional development. That at this stage of city commercial banks through mergers and acquisitions and cross-regional development to increase liquidity and asset size on the development of city commercial banks is beneficial. City commercial banks at this stage should be used to the advantage of holding the local government to actively explore the market, while further improving the corporate governance structure.