A Study On The Relationship Between Executives’Social Capital And Bank Risk Taking

Abstract:After the financial crisis, governments in many countries have strengthened the supervision of the banking risk.While, if we want to improve the effective of bank’s risk supervision, we must enhance the understanding of various factors affecting bank risk taking behavior firstly. China is a "relational" society,"guanxi" plays an important role in China’s economic activities.For the banking sector,it’s development is not sound, and it’s marketization level is not high,therefore, the influence of the "guanxi" is more obvious. Many types of "guanxi" will affect bank risk-taking behavior, but the most important factors whch can impact bank risk-taking behavior should be the guanxi between bank executives and bank’s stakeholders, namely the social capital of the bank executives. Bank executives have many kinds of social capital, but what have the greatest influence on bank risk-taking behavior should be the guanxi between bank executives and government departments(political connections) and the guanxi between bank executives and financial corporate or departments(financial connections). Thus, from the perspective of political connections and financial connections, this paper studies the relationships between bank executives’social capital and bank risk-taking behavior.This paper provides a new view for the related research fields, provides new empirical evidence.besides,it provides the basis for regulators to set risk control policies.This paper includes one figure,25tables and107references.In this paper, I firstly comb and review the literatures about the factors influencing bank risk-taking behavior, and define the important concepts in the paper, such as social capital and bank risk-taking behavior.Meanwhile, I build an indicator system to measure the executives’social capital and bank risk-taking behavior.Secondly,I use the data of32commercial Banks in China from2007to2012for empirical research.First of all,I study the relationships between political connections and bank risk-taking behavior.Then,I consider whether list or not list can influence the "relationships". Besides, I compare the different impact of different types of executives’political connections on bank risk-taking behavior. Thirdly, I use the data of32commercial Banks in China from2007to2012to study the relationships between executives’ financial connections and bank risk-taking behavior. On the basis of empirical research metioned above, I examine the influence of political connection on the relationships between executives’financial connections and bank risk-taking behavior. Besides, I compare the different effects of political connection and financial connection on bank risk-taking behavior. Finally, I summariz the research of this paper, from the perspective of the government, particularly for banking regulatory departments, I put forward some policy Suggestions. This study have significant innovations in many dimensions, such as the perspectives, research content and index design and so on.it can offer very good research reference for the theoretical circle, and for the practice, especially for the banking regulators,it provides a good reference to control the bank risks.