Study On The Choice Of Organizational Form Of The City Commercial Banks Based On Cross-regional Business

The City Commercial Banks (CCBs), as the third echelon of the Chinese bankingSystem, was limited to operate in their own city since their foundation. With theregional economic integration development and the policy of cross-regionaldevelopment has become more liberal in recent years, the One City Operationmechanism cannot meet the requirements of Market development. On the one hand,the regional economic integration development has promoted the capital flows acrossregions, the customers need commercial banks to provide cross-regional financialservices and products. So cross-regional business has become a trend. On the otherhand, Supervision department gradually eased restrictions on better qualification CityCommercial Banks with cross-regional business. In April2009, The China BankingRegulatory Commission issued "The adjustment suggestion of Market access policyon Medium-small Commercial Bank (Trail)", which relaxed the restrictions on CityCommercial Banks with cross-regional business and adjusted the approval process onsetting up different branches in the same province. It promoted the rapid developmenton cross-regional business of City Commercial Banks.Cross-regional business should consider many factors according to the situationsof the City Commercial Banks. The selecting of organizational forms is undoubtedly acrucial step to the City Commercial Banks with Cross-regional business. The CityCommercial Banks could choose mergers and acquisitions, the establishment ofbranches in different places, regional joint, direct equity participation, theestablishment of rural banks and other business model as the key forms. The CityCommercial Banks with cross-regional business is not limited to a single model undercertain conditions, the key point is to select the correct forms which is suitable to theactual situation.This article chose the selecting of organizational forms of City CommercialBanks with cross-regional business as the theme. It is used the growth pole theory, theregional economic integration theory, economies of scale and scope of economictheory, transaction cost theory and profit maximization theory comprehensively. It isapplied a combination of theoretical analysis and mathematical proof to analyze thecurrent situation, the mode selection, the characteristics and the mainstream modeselection of cross-regional development, the Influencing factors of direct equity participation and the establishment of branches. Moreover，there is a comparativeanalysis of direct equity participation and establishment of branches in the differentinfluencing factors with the profit model. Finally, it is giving some proposals of CityCommercial Banks about cross-regional business.