A Study On The Relationship Of The Ownership Structure And Performance Of China’s Listed Banks

In2008, due to a global financial crisis caused by the Sub-prime mortgage crisis inAmerica, the world financial sector had suffered a lot from the heavy financial storm.Banking, even as the core of the financial sector, was not an exception of the vortex.The crisis has exposed serious defects existing in the Banks’ corporate governancemechanism, which attracted much attention of financial regulators all over the world,and they were determined to better the Banks’ corporate governance mechanism andmake it perfect.In corporate governance, ownership structure is the basic fundamental, which is animportant factor influencing the performance of its governance. As is known, anunreasonable ownership structure will seriously affect the performance of corporategovernance. For China’s commercial Banks, the ownership structure has a certainparticularity. In China, Commercial Banks had been growing up in the era of plannedeconomy, and experienced a wave of shareholding system reforming, thus theownership structure is different from that of Europe, the United States and otherdeveloped countries, so is it from other industries in China. Under the special marketenvironment in China, how can bank equity ownership structure affect its businessperformance? This has been the focus problem of Chinese scholars. Therefore, in orderto gain a sustainable development of the commercial banks, it is of great significance tostudy the relationship between the two, and explore the method of how to improvebusiness performance by optimizing the ownership structure in China.Through the method of combining theory and empirical research, this dissertationfurther analyzes the relationship between ownership structure and performance of thebank. This dissertation can be divided into five parts.The first part is an theoretical analysis. Firstly, the author review overseas anddomestics studying status and make simple analysis. Secondly, it defines and measuresthe ownership structure and performance of the commercial banks. At last, it introducesthe theoretical analysis of how the shareholding structure affect performance, it isexplained mainly from four mechanisms: the excitation, supervision, agencycompetition and mergers and acquisitions. All these have laid a theoretical foundationfor the empirical analysis in this dissertation.The second part is the present situation of the listed Banks ownership structure andperformance analysis. First of all, through the data tables and the descriptive statistics, the author analyzes China’s listed Banks ownership structure present situation separatelyfrom the equity concentration, the nature of the equity and circulation. And the studyfinds out that: state-owned shares are still dominant; basic realization of full circulationshares; state-owned banks highly centralized equity, and equity is relativelyconcentrated shareholding commercial bank as well as the differences between Banks.Then, using the trend analysis method, the dissertation respectively analyzes theperformance of listed Banks in China’s present situation from the four aspects ofprofitability, security, liquidity and growth, which finds that state-owned commercialbanks profitability is stronger than joint-stock commercial banks, but its growth wasweaker than joint-stock commercial banks. In conclusion, security and liquidity arebetter improved in all listed banks.The third part is empirical analysis. Firstly, the selection of sample and variable isintroduced. With11listed Banks in China in2007-2011data as the research sample,using the principal component analysis method, the author builds the integratedperformance indicator P as the explained variables from four aspects of the profitability,security, liquidity, growth. Then select the first big shareholder’s shareholding (A1), thetop10major shareholders holdings (A10), the first big shareholder control ability (Z),percentage of state-owned shares (GY), percentage of non-state-owned legal personshare (FGY) within the territory, percentage of foreign legal person share (WF),percentage of shares outstanding (LT) as the explained variables; while take assets(LNasset), asset-liability ratio (DR) as control variables. Secondly, the dissertation putsforward the research hypothesis according to the theory, and establishes fixed effectvariable constant coefficient intercept model. Finally, empirical analysis is carried onthe relationship between the bank ownership structure and comprehensive performance,and find that: relatively centralized equity structure has the most beneficiary for theimprovement of the bank’s performance; increasing the proportion of state-ownedshares and the tradable shares is not conducive to improve the performance; andnon-state-owned legal person’s ownership can not improve the performance of banksignificantly, while overseas strategic investors do more favors to the performance in acertain degree.The fourth part covers the research conclusions and policy recommendations.According to the results of the study, the dissertation puts forward some policyrecommendations: introduce more institutional investors to dispersed the ownership;appropriately reduce state shareholding, and optimize the national behavior patterns of shareholders as well as better market mechanism and supervision system. All thesetogether will lay a solid foundation and produce a good external environment for thefurther reform of the banks in China.