The Influence Of Equity Structure And Foreign Capital Participation On The Performance Of China’s Commercial Banks

Since China’s accession to the WTO in 2001,unprecedented changes have taken place in the banking industry.State-owned Commercial Banks have gradually completed the share reform and gone public.The banking industry has been fully opened and foreign banks have entered the domestic market on a large scale.Equity Structure,as the basis of corporate governance structure,has always been the focus of theoretical circle,financial industry and regulatory authorities for its impact on bank performance.Research on it can provide ideas for bank managers and regulators to improve bank performance.Meanwhile,"Decision of the Bank of China Insurance Regulatory Commission on Abolishing and Amending Certain Regulations" released on August 23,2018,proposed to cancel the restrictions on the foreign shareholding ratio of China’s Commercial Banks and Asset Management Companies.Domestic and foreign investors will stand at the same starting line and treat each other as equals.This decision is in favor of foreign investment.Although the abolition of foreign ownership restrictions is the trend,there is still scholars to drop foreign ownership,they think that fully relax restrictions on foreign ownership is not only conducive to the development of China’s Commercial Banks,but also can lead to foreign banks became the dominant force in China’s banking industry,to introduce influence our country’s financial security.It is necessary to conduct empirical research to further verify the impact of the continuous opening of the banking industry on the performance of domestic commercial banks.Therefore,this paper has significant research significance in studying the influence of Equity Structure on the Performance of China’s Commercial Banks while adding Foreign Capital Participation.Firstly,this paper briefly introduces the Equity Structure,Foreign Capital Participation and Performance of China’s Commercial Banks.It is found that the ownership concentration of China’s Commercial Banks is high,and can not achieve effective checks and balances;Due to the previous restrictions on the proportion of foreign ownership,the Foreign Capital Participation in China’s Commercial Banks is low,and there are great differences among samples.In terms of performance,it may be the reason for the fierce competition among commercial banks in China and the gradual improvement of regulatory requirements.In terms of profitability and development,the overall trend is declining year by year,while liquidity and safety are improving year by year.Secondly,this paper analyzes the impact of Equity Structure and Foreign Capital Participation on the Performance of China’s Commercial Banks and puts forward three hypotheses.Thirdly,based on the representativeness and availability of data,the data of 16 domestic listed commercial banks from 2011 to 2017 were used as the research data of this paper.Factor analysis is used to measure the performance of China’s Commercial Banks,which is taken as the explained variable.Equity Structure and Foreign Capital Participation as the core variable,the Assets of Commercial Banks and Asset-liability Ratio as control variable,building five regression models for empirical research.The empirical results show that Equity Concentration has a significant negative impact on the Performance of China’s Commercial Banks,Equity Balance has a significant positive impact on the Performance of China’s Commercial Banks,Foreign Capital Participation has a significant negative impact on China’s Commercial Banks.Foreign Capital Participation and theoretical expectations are not consistent.The Assets of Commercial Banks has a significant negative impact on the Performance of China’s Commercial Banks,and the Asset-liability Ratio has a significant positive impact on the Performance of China’s Commercial Banks.Finally,based on the empirical results,it proposes countermeasures from four aspects: optimizing equity structure,introducing high-quality foreign strategic investors,improving the governance level of commercial Banks,strengthening financial supervision and international exchanges and cooperation.