Regional Expansion Of City Commercial Banks:Intrinsic Motivation And Externality

As an important part of our financial system, the steady and rapid development of city commercial banks will be in favor of rending a better service for our economy. However, its development is not smooth, and there is violent controversy among the advantages and disadvantages, the speed and the scale, the mode of regional expansion. The attitude of the regulatory authority has been always changing:restriction-release under control-promote-discontinue. The development of the city commercial banks is now backing to the start after five years’exploration from2006to2010.Theoretical research is used to find the true motivation and hidden danger of "running horse stable place" through the representation of rapid regional expansion of city commercial banks, but difficult for us to evaluate its effect on the bank itself and macroeconomic. Case analysis is used to observe the expansion track of a certain bank, which is considered as an independent legal entity but controlled by government shareholders, but not fitting for all the city commercial banks with different scales, different equity structures and different corporate governance standards. Introducing the American’s cancel of interstate banking restriction, we can provide an important reference for our city commercial banks’ regional expenditure, but the specialty of each bank system must be considered. After five years’rapid expansion, our debates about this question have never ceased, numerous theoretical papers with different opinions about advantages and disadvantages, model and management hidden danger. There are also a variety of case analyses which covers city commercial banks with different scale, different model and different management, and thus experts make different prescriptions. There are also lots of papers who use American’s bank development path and community banks model as references, which think that city commercial banks should return to the initial position that these banks should be established in local city, citizens and medium-sized and small enterprises. But as an important summery of this five years, we should make objective and impartial assessment about the effect on the bank itself,the financial system and economic development of regional expansion through data, and what is the most important is that we should do some further meaningful research about its development. It is a pity that these papers are rarely, and this paper tries to do this task.First of all, this paper illustrates the great achievements and a list of questions of city commercial banks among the five years’ rapid expansion from2006to2010. Then, we draw scholar’s controversy about this question. However, this paper will not be limited to the list of debates and advice. The analyses of the influence of city commercial bank’s regional expansion will help us to know the bank’s features and it is useful for us to make an objective and impartial assessment about so-called blind expansion without considering their scale and management. The analyses of the influence of geological factors on the bank’s performance and risk will make us understand the expansion motivation and the similar expansion path. We also analyze the expansion path to make it certain why the branches centered on the developed and east-coastal cities. We analyze the externalities of financial systems and economic development from the expansion of city commercial banks, for it is a question we must face, and also because it can make us not negate the positive effect for some accidental financial law case. To develop rapidly, there are no the same external economical environment and national macroeconomic polices as the last five years for city commercial banks, it is the time for their intensive farming and expansion towards the county economy which full of economic vitality but lack of enough financial service. So, this paper makes detailed analyses with SWOT, and believes that it will have a brilliant future. This is the core of the paper, and is also the problem which this paper tries to solve.In the method of the research, the synthesis application of descriptive analysis and quantitative analysis make us deeply realize the motivation, the effects of regional expansion of city commercial banks on themselves and the externality. The introduction of four national equity commercial banks, makes us understand the generality and individuality between the different types of banks, and also gives us an evidence to propose development strategy toward county economy. We use the dynamic and static analyses to restore the features in different stages of city commercial banks, to give a more objective and fairness assess.