An Empirical Study On The Relationship Between China Rural Commercial Bank Equity Structure And Risk Taking

Equity structure is the core of modern corporate governance.Whether it is appropriate or not is related to the level of corporate governance efficiency,and then affects the business decision-making and risk management.Rural commercial banks are an important part of China's rural financial system whose risk management issues affect the stability of the entire rural financial system.While rural commercial banks developed rapidly,it exposed a series of problems such as high non-performing loan rates and chaotic corporate governance.More importantly,the problem of �ownership vacancy� caused by decentralized equity,low shareholding ratio of major shareholders,and unclear shareholder status makes management lack effective supervision,makes �agent costs� increased,and has a negative effect on risk management of rural commercial banks.This paper uses data from panel data of 40 rural commercial banks during the period of 2010-2016 to empirically study the relationship between the equity structure and risk-taking of rural commercial banks.The study found that the degree of equity concentration was in a U-shaped relationship with the risk-taking of rural commercial banks and that the proportion of state-owned legal person holding shares was negatively correlated with risk-taking.However,no correlation was found between the degree of equity balance and risk-taking.This paper divides the sample into provincial-level or vice provincial-level,prefecture-level and county-level rural commercial banks.In the study,it was found that the impact of equity structure on the risks of rural commercial banks was different due to different administrative levels,and the conclusions were also different.In the further study,it was found that the degree of equity concentration was prone to adjust with the risks of rural commercial banks.The higher the risk level in the previous period,the higher the proportion of the largest shareholder in the current period and the lower the shareholding ratio of the top five shareholders.In addition,this paper explores the internal mechanism between the equity structure and the risk-taking of rural commercial banks.It has been found that equity concentration,the size of the board of supervisors and the number of shareholders' supervisors have a positive correlation.However,it has not confirmed that the equity structure affects the risk-taking through independent directors.The higher the ratios of the state-owned holdings and that of shares held by the top five shareholders are,the higher the concentration of loans will be.In summary,the equity structure may affect the risk-taking of rural commercial banks through the characteristics of the board of supervisors and the degree of loan concentration.