Research On Relations Between China’s City Commercial Internal Governance And Performance

As a special births of our financial system, City firm has been a rapid development since1998. By the end of2010, deposits have reached6.1trillion yuan,loans have reached3.6trillion yuan in the city commercial banks. City firm was established to provide financial support for the increasingly active individual businesses and private companies. In late2010, the City firm for SMEs loans reached1.1trillion yuan, making a great contribution to solve the problem of financing of SMEs. With the development of city commercial banks, its internal governance issues are becoming increasingly the focus o all kinds of people. Therefore, do the study of which impacts internal governance has on performance of City firms will undoubtedly have a higher theoretical value and practical significance.In this context, this article collect to the23city commercial banks2008-2010data as a sample, then we carried out research on the relationship between internal governance and performance of city commercial banks by the way of correlation analysis and regression analysis, to improve their internal governance mechanisms, thereby increasing the overall performance of the City firm to achieve sustainable development.The study found that:(1) proportion of shareholding and city commercial performance was the inverted "U"-type relationship between the equity balance degree and the improvement of the performance of Bank.(2) the local government as the largest shareholder will help improve bank performance.(3) The size of Board in the City firm is negatively correlated with the overall performance, the larger, the performance is getting worse.(4) the proportion of independent directors have a positive role in promoting the comprehensive performance of the bank.(5) Number of board meetings and the City firm performance are positively correlated.(6) The size of Board of Supervisors and number of meetings of the Board of Supervisors have no obvious correlation with the overall performance of City firm.(7), executives holding proportion has a significant positive correlation with City firm performance.Finally, by our findings, we put forward suggestions to improve the City firm internal governance mechanisms:an optimization of the ownership structure,on the premise of maintaining the status of the local government as the largest shareholder, to enhance the degree of equity between the checks and balances; it’s a must to strengthen the board of directors function, improve efficiency of decision-making and oversight; strengthen the board of supervisors, to strengthen the supervision of the board of directors and executives; to richen executives incentives, pay attention to the combination of short-term and medium-and long-term. Ultimately to improve the overall performance of the City firm to achieve sustainable development.