Reflection And Reconstruction

Establishing a sound and efficient corporate governance mechanism is the focus of China’s small and medium-sized commercial Banks(SMCBs) reform, and is also the basis of internal management improvements. Under the promote of supervision institutes, China’s SMCBs have generally established a moderately acceptable corporate governance structure and mechanism, which including Shareholders’ Meeting, Board of Directors, Board of Supervisors and Senior Managers. Corporate governance mechanism has played a positive role in enhancing the bank’s ability of operation and management. But the defects are also obvious, such as internal control, and the difficulty to really play a substantial role. One of the reasons, I believe, is that China’s market-oriented reform of banking system started just few years ago, and corporate governance philosophy has not been accepted welledly. The other reason is that China, in recent years, has introduced many basic corporate governance concepts, principles and practices from the west, but most of them are distinct from China’s social environment, market base and reality. Therefore, the effect of them is negligible. The corporate governance of advanced banks is based on the highly developed market, in which banks are completely independent market players and in full compliance with market rules. However, China’s market maturity and conditions are significantly different from the west. In china’s banking system, banks are not fully independent market entities, and government administrative power is the the real foundation. These differences result that the corporate governance mechanism which is proved to be effective in the west has little influence in our country. Based on this judgment, I investigate the present situation of China’s SMCBs corporate governance in this paper.This paper starting from the theoretical analysis, which describes the theories evolution of general corporate governance and development of corporate governance practices in foreign and local commercial banks, and to sum up the enlightenment to China’s SMCBs. Based on the analysis of current situation, I concluded nine defects of China’s SMCBs corporate governance, and proposed six suggestions targeting to improve it.