Study On The Relationship Between Corporate Governance And Operating Performance In Chinese City Commercial Banks

After 20 years of rapid development,most of the city commercial banks(CCB)that are owned by local government or fiscal holding,had great improvement in fields of asset scale,equity structure,non-performing loan ratio and corporate governance.The rise of city commercial banks enriches the competition pattern of China’s banking industry,promoting the formation of a moderate competitive,multi-tiered and full coverage banking industry structure in China.In the mid-1990 s,led by local government,many regional credit cooperatives merged into city banks with local finance bureau or the SASAC and state-owned enterprises as initial controlling shareholder,in the attempt to ease the burden of government debts.Government,as consigner,usually appointed or hired senior management personnel as agents to run and manage city banks.However,government undertook most of the management function in economic development,was inconsistent with the goals of the modern property right system,which calls for separation of government and enterprises in the socialist market economy.Potential unfair competition of the market economy cause by the old-fashion governance and the highly specialized competition problems in the financial industry urge city commercial banks to continuously carry out equity reform,and improve corporate governance,thereby enhancing business performance and competitiveness.This thesis started from realistic background,referred to some existing theoretical studies on the influence of corporate governance and business performance of commercial banks,and expounded the current situation of corporate governance and business performance of city commercial banks,then led to the study on the logic relationship between corporate governance and business performance of city commercial banks.The author analyzed from different aspects of the influence of corporate governance in the business performance of city commercial banks based on theoretical researches and status analysis.By referring existing theories and quantitative models,and analyzing the recent 5 years annual reports released by the 58 city commercial banks in China,the study tried to derive the empirical model of corporate governance and business performance of city commercial banks,and with the attempt to breakthrough most of the existing documents.Since most of the city commercial banks failed to disclose the complete annual report information to the public by 2013,it is impossible to fully demonstrate the defects of the relationship through a large number of continuous operation data.This thesis consists of five chapters.Chapter one mainly introduces the research background,significance,contents of corporate governance and operating performance,andillustrates possible innovation and inadequacies of domestic and foreign existing theoretical reviews.Chapter two analyzes the related concepts and theoretical basis of corporate governance,analyzes the status of corporate governance development of city commercial banks in China,and looks for the logical relationship between various corporate governance factors and operational performance.Chapter three studies the relationship between corporate governance and the theoretical influence on the business performance of city commercial banks through the aspects of ownership structure governance,executive ownership incentive,board independence and strategic investors.At the end of this chapter,a hypothesis is put forward,and bring up the basic theoretical model according to the hypothesis.The core of the thesis is in Chapter four.The author sorts annual financial reports from year 2011-2015 of 58 commercial banks into operating indicator panel data,uses the principal component analysis method to constructs a comprehensive management performance model of city commercial banks with the 12 core operating indexes in concerns of safety,liquidity,profitability,so as to measure the city commercial banks’ operational performance.A panel regression model is used to examine the influence of corporate governance on the comprehensive management performance of the city commercial banks.The model takes the comprehensive operational performance model as interpreted variable,takes equity structure governance,board governance,executive ownership incentive governance and introduction of overseas strategic investors as explanatory variables,and takes total assets,net profit,non-performing loan rate,capital assets ratio,cost income ratio as control variables,in order to reach the conclusions.The last chapter summarizes the empirical model regression conclusion.It shows that nowadays the state-owned holding degree of city commercial banks and the proportion of the top 10 shareholders are negatively related to business performance.While the size of the board of directors has a positive impact on business performance of banks,the independent director usually did not play the independent supervisory role.The introduction of strategic investors will help to improve the business performance.The impact of listing on business performance is negative,mainly because a majority of listed city commercial banks went public in the past two years,has not yet reflected positive effects in financial data,and need to be further observed in the coming years.In addition,senior management directors accounted for a positive impact on bank performance;the increase in the proportion of holding directors helps improving business performance.Eventually the thesis proposes suggestions on corporate governance of city commercial banks,and hopes the finding can be applied in most of the city commercial banks as future reference of corporate governance and management.