Research On The Vulnerability Of The Listed Banks Based On Corporate Governance

With the global economic and financial factors continuing to accelerate the flow of countries to improve the regulatory system under the premise of gradual liberalization of the financial markets, China’s financial structure has also undergone rapid changes and achieved great results. However, on the other hand, the gradual liberalization of China’s financial market makes foreign capital enter into China in various forms, China’s financial system and the banking system to enjoy the opportunities of market liberalization is inevitable when faces enormous challenges, how to deal with this challenge effectively is placed in front of each financial institution which is a major problem. Considered from the perspective of the banking system, banks are the main financial markets, the banking system is stable or not which has great significance for our financial market and the macro, and the current problems that exist in the banking system can not only increase their vulnerability but also affect our national security, stability and development of the financial sector adversely. Especially in recent years, China will gradually relax capital controls and advance the process of market interest rates, which put forward higher requirements for the operation of the banking system. In this financial backdrop, improving the competitiveness and the ability to withstand risks of China’s commercial banks becomes increasingly important. Commercial banks need to constantly improve the internal and external corporate governance structure, make full use of the initiative improve the level of corporate governance, and reduce bank vulnerability at the same time of accelerating the transformation of mode of operation. Therefore, this paper focuses on the commercial bank vulnerability to explore the influence of different corporate governance structure to reduce the impact of banking system vulnerability, which has important significance for improving bank stability and promoting the healthy development.Firstly, this article uses the theoretical method to study the impact of the corporate governance structure of commercial banks on the vulnerability of banks, and uses empirical methods to verify the theoretical analysis. This article will use a combination of theoretical and empirical analysis methods to study the impact of the corporate governance structure of commercial banks on the bank vulnerability. This paper first introduces the research background,significance, research ideas, reviews relevant literature, and points out the innovation. Then elaborates theories about of the commercial banking company governance and banking vulnerability. Firstly, it introduces the definition of corporate governance, which introduces from the aspects of internal and external governance of banking company governance structure; secondly, the commercial bank vulnerability theory is introduced, and it elaborates the bank vulnerability’s definition, the external manifestations and influence factors; thirdly, based on the perspective of corporate governance, it analyzes the impact of structure, board composition and executive pay equity on bank fragility.On the basis of theoretical analysis, this paper puts forward the hypothesis of banking vulnerability from the aspects of banking company governance commercial ownership structure, the board of supervisors and directors, and builds the empirical model. This paper is to study the vulnerability of banks based on view of corporate governance, but the existing studies don’t find a specific index to measure the bank vulnerability, So before building the research model, we will use the entropy method, and choose the bank’s capital adequacy ratio, non-performing loan ratio, liquidity ratio and other indicators to build the entropy scoring models of estimating bank vulnerability. On this basis, the resulting score will be created in the entropy model, as a representative of the bank vulnerability explanatory variables to the indicators on behalf of the bank’s corporate governance structure, and then we build a panel data model, in which the explanatory variables includes ownership structure, board governance and the board of supervisors governance. In the part of empirical analysis, this paper selects the relevant data of14listed banks from2007to2012as samples, using panel data model to verify the hypotheses proposed in this paper, and using the results to validate the proposed research hypotheses. Finally we draw the conclusion that the reduction of Chinese banking concentration ratio of shares can reduce the level of vulnerability of banks and other conclusions.Finally, this paper will put forward some policy recommendations based on the empirical results. So China’s commercial banks can improve the corporate governance structure constantly and the stability in the face of the complicated international and domestic economic situation.