Regulatory Sanctions,Bank Reputation And Comprahensive Financial Performance Analysis

In recent years,major domestic commercial banks’ pursuits for the speed and scale of business development have led to a decline in compliance awareness and deviated from the principle of prudent operation.In the process,there were problems such as inadequate due diligence and improper post-investment management.With the continuous exposure of violations,the credibility image of the banking industry in the hearts of the public has also been affected.According to the public data of the China Banking Regulatory Commission,the banking regulatory authorities,the banking regulatory bureau and sub-bureau issued 3452 fines in 2017,involving 1877 institutions,which increased by about three times over the same period,and the cumulative confiscation of illegal income and penalties is about 3 billion yuan,an increase of more than 10 times over the same period.Despite this,bank violations are still frequent,and the phenomenon of "two-way upgrades" in the supervision of sanctions and violations is obviously not conducive to the stable development of China’s financial markets.It not only breaks the order of the financial markets,but also it cannot ensure "the bottom line of systemic risk",which finally may endanger the healthy development of the real economy.At the same time,the superposition of "financial disintermediation",macroeconomy slowing down,the booming of Internet finance,the fierce competition of non-bank financial institutions,the deepening of diversified operations of foreign banks,and the lowering of the threshold for private capital to intervene in banks have led commercial banks to be faced with pressure from various aspects such as profitability,risk control and industry competition,the living environment has undergone a major change.Under the severe punishment by the regulatory authorities and fierce competition in the banking industry,this paper comprehensively analyzes the impact of supervision on the comprehensive financial performance of listed commercial banks,by combing the impact of regulatory sanctions on the reputation of commercial banks and their market feedback,from tow paths of the direct financial effect and indirect reputation effect,as well as supervision intensity and strength.On the basis of reviewing the literature,the relationship between regulatory sanctions,reputation and financial performance is reviewed in detail,and relevant theoretical analysis is used to propose the research hypothesis.This paper calculated the comprehensive financial performance of commercial banks in each quarter by using the method of global principal component analysis(GPCA)to analyze the quarterly financial data of 16 listed banks during the period from 2010 to 2017,with SPSS 19.0,and the fixed-effects model was took for regression analysis.It tests:(1)the direct effect of regulatory sanctions on comprehensive financial performance;(2)the transmission of bank reputation on regulatory information;(3)the impact of reputation transmission on the behavior of stakeholders and its effectiveness.Results show that:(1)the strength of regulatory sanctions has no significant impact on the comprehensive financial performance of listed commercial banks.The intensity of regulatory sanctions has a " U-shaped " impact on the bank’s comprehensive financial performance;(2)regulatory sanctions have caused changes in bank reputation,and this information weren’t reflected by supervision strength.But the information on regulatory intensity is effectively transmitted across comprehensive financial performance,which means the regulatory sanctions have an indirect effect;(3)the bank reputation effectively transmits the information of the supervision sanctions to the internal managers,leading to the changes of their behavior,presenting inverted "U-shaped" change and ultimately passed on to the comprehensive financial performance.Based on the results above,this paper put forward the suggestion from two parts:the bank iteslf and the regulatory authorities.With the deleveraging of financial markets,expansion of the financial sector and fierce competition in the future,domestic commercial banks should pay more attention to reputational events such as breach of contract.Do well in compliance and lawful operation,also in the establishment and maintenance of reputation.Avoid damage to reputation and improve the quality of it.Regulatory authorities should hold the "scale" of regulatory sanctions,reduce the impact on the banking industry,encourage banks to regulate operations,and avoid reputational risk events such as breach of contract,while achieving positive incentive effects.The theoretical significance of this paper is to verify the reputation effect and reputation value after the bank’s regulatory sanctions;the practical significance is to choose better regulatory sanctions for the regulatory authorities,improve the regulatory system,and arouse the attention of commercial banks to the reputation culture,which has a certain practical reference.