Research Of Bank Shareholder’s Lending Facilities

In the financial system of China, The bond market, equity market, money market and other market are mutual split. Since the development level direct financing market is low, Chinese financing accesses have long been dominated by indirect financing. In the credit constraints, through the establishment of a bank,or investment bank to become shareholders of a bank,to become more convenient access to related party loans may become the choice of many companies.It worth to pay attention and research since the increasing of related party loans has become a common phenomenon. In recent years, the shareholder loan problems associated seriously affects the development of small and medium-sized joint-stock Banks in China.The information view means that related party loans is efficient,it makes limited information to maximize the effect. The view is that the related transactions to plunder, trade association is the largest shareholder of the bank robbery of the bank by means of loan control policy. This study supports the view of "looting ". Through empirical studies proved that the large shareholders of city commercial bank have the convenience to obtain related party loans, in the subsequent research of related party loans on banks and the economic consequences, we found evidence to support for "looting view". This paper uses 334 city commercial banks from 2006 to 2013 as the sample data, found that large shareholders are more available to financing through related party loans, which have a significant negative impact on commercial bank profitability and asset quality. The empirical results show that, when the property of large shareholder is state-owned, the higher of the proportion of related loans, the higher the real productivity index is. Related lending to non-state owned enterprises have no impact on the bank’s credit risk. In addition, large shareholders and related lending banks operating performance showed a significant negative correlation, the higher the proportion of related lending, the lower of bank’s profit level. Compared with the large shareholder, state-owned enterprises showed significant role of tunneling.Although many scholars have loan problems associated to end of the paper, but the systematic research of our country’s small and medium-sized shareholders associated bank loans literature is rare. This paper provides empirical data for the negative impact of direct tunneling of commercial banks’major shareholders which supports "looting" view, enrich the literature related loans and commercial bank governance, aimed to strengthen the credit behavior norms of governance and banking regulatory agencies of small and medium-sized commercial banks.This paper also aimed to promote the effective allocation of social credit resources, in order to solve the real economy (especially small enterprises) financing problem.