Research On The Management Of Siming Commercial Savings Bank (1908-1937)

Banking is the center of a country’s economy and the hinge of all industry.It has close relationship with the national economy.Ningpo commercial and savings bank("Ningpo bank" for short)was one of the famous "Small Four Banks" in the history of modern finance of China.It was founded in 1908,when money houses were still strong and new banks had sprouted.Its development,turning point and the end basically reflected the process of the rise and fall of banks.It was a model of modern private commercial banks succeeding in management,and also taught lessons.Therefore,this paper attempts to use the new method to solve the old problems,and use history as a mirror to avoid going astray by reviewing the past.Firstly,this paper outlines the development history of the rise and fall of Ningpo bank.Ningpo bank was established early,seized the opportunity of rapid development,and reached the peak of the development in early 1930s through the banknotes issuing,deposits and savings.In middle 1930s,the buried business risks intensively broke out.Ningpo bank declined gradually.It was controlled by the National Government and finally reorganized into a government-private joint bank.Secondly,this paper analyzes the characteristics of the conventional business management of Ningpo bank by using the theory of modern commercial bank management.It found that Ningpo bank attached great importance to the banknotes issuing and savings in order to obtain funds;the staff’s grade,reward and punishment was clear.It also paid attention to the mutual help with Ningpo group and the maintenance of bank reputation.The risk management indicators had obvious time characteristics.Before 1930,the indicators were good,and it developed strongly.However,there were often some crisis concealed behind the prosperity.The risk control weaknesses showed in early 1930s,and intensively broke out in the middle of 1930s.It couldn’t save itself and decayed.Next,this paper establishes the VAR model to analyze the impact of Ningpo bank’s management on its profitability.It found that the influence of asset returns and liquidity ratio on asset returns is large,and the influence of credit loans ratio and cost income ratio on asset return effect is relatively small.The bank’s return on assets was mainly affected by the positive influence from its own,and this effect had long-term effect.This paper also reveals that Ningpo bank was faced with the problem that it couldn’t both own low risk and high profit.To some extent,the increase in profitability depended on the increase in the credit loans ratio and core capital ratio.On this basis,this paper draws out that the reasons of Ningpo bank’s development are as follows:the banknotes issuing and deposits,savings together brought much money to the bank;the use of funds was appropriate at that time,and the large-scale lending and real estate investment obtained huge profits;founded by the famous Ningpo enterprisers,it had a great development with the mutual help with Ningpo Group.Both internal and external factors caused its decline:to a certain extent,the turbulent political and economic circumstances caused its difficult situation;the weaknesses in its own business management such as centralization of power,ignorance of risks while gathering and using funds and conservative business policy were the inner causes of its collapse,which led to its outwardly strong but inwardly weak while entering in the 1930s.This paper argues that the China’s modern commercial bank should learn from the advantages of Ningpo bank’s business management,and its poor management eventually led to its decline is worthy of reflection.Finally,this paper puts forward eight suggestions for reference on the management and reform of China’s modem commercial bank.