| Political connection has been a popular topic,but at present most scholars pay more attention to the research on non-financial companies and discuss the effects of political connection on their performance,enterprise mergers and acquisitions,corporate loans,etc.Currently,there are many studies about the relationship and mechanism between political connection and non-financial companies,but it is worth noting that commercial bank is different from general enterprises,under the background of political connection,it needs not only the help of the government to get more political and social resources to improve bank performance,it also needs to undertake and implement the government economic regulation and control,for example,during the financial crisis,instead of tightening lending,the commercial banks are required to expand loans to actively promote the investment in order to avoid the economy recession.Therefore,this article will take commercial banks as the research object.At first,we explore how political connection affects the bank performance from three aspects of assets,profits and non-performing loan ratio.Secondly,we will figure out how the external government official promotion motivation and the board of director structure affect the above-mentioned relationship.The 14 listed commercial banks are selected and the panel data model is used to analyze them.The following conclusions are drawn:(1)Political connection can significantly increase the bank profit,but mainly in non-state banks,at the same time,political association will increase the non-performing loan ratio,but mainly in the state-owned banks.The conclusion shows that even though the political connection in state-owned banks can bring more government projects,but state-owned banks also need to implement monetary policy which will offset positive profit caused by the above-mentioned projects.As a result,the profit of state-owned banks cannot be promoted.Moreover,the non-performing loan ratio in state-owned banks increases because the loan behavior of state-owned banks is in accordance with the characteristics of adverse economic cycle.For the non-state-owned banks,the political connection can bring more social resources and projects,which will increase the bank performance;in addition,with restraint of the capital,the non-state-owned is not capable of fully implementing the central government policy,so they are less affected by negative effects from the central policy.Besides,due to the lack of protection from the government ownership,the non-state-owned banks will pay more attention to the bank performance and risk control.(2)From the empirical results of all sample banks,the official promotion competition will positively influent the relationship between political connection and the bank assets and the relationship between political connection and the non-performing loan ratio,but the board governance structure will negatively influent the relationship between political connection and non-performing loans ratio.(3)From the empirical results of different ownership banks,in the state-owned banks,the official promotion motivation can strength the positive relationship between political connection and non--performing loan ratio,and the board governance structure has no effect on the relationship between the political connection and bank performance;in the non-state-owned banks,the official promotion motivation will weaken the positive relationship between the political connection and bank profit,and the board governance structure will strength the positive relationship between the political connection and bank profit,at the same time,it will weaken the positive relationship between political connection and non--performing loan ratio.This paper argues that since state-owned banks have significant effect on promoting the local economy mainly due to the large capital,moreover in China,the local official promotion is closely related to the local economy growth.As a result,during the economy recession,the local officials have stronger motivation to intervene the bank loan policy in order to enhance the social investment and economy growth;however,increasing the loan during the 1economy recession is very risky.Besides,for these chairmen of the board and presidents in the state-owned banks,fulfilling the task delegated by the government is much more important than improving bank performance,so the board is focusing more on the political mission rather than the bank performance and risk control.In non-state banks,the promotion competition of government officials will strengthen the political association with the government,but since the non-state-owned banks have less influence on the local economy growth,the local government cannot give the non-state-owned banks more political resources,as a result,the strengthening of political association will weaken the bank performance.On the contrary,with the consideration of shareholder interests,bank performance and the pressure of share price,the board will carry out more effective strategies and management to decrease the negative influence from government intervention,as a result,the non-state bank profit and non-performing loan ratio can be well improved.Finally according to the research conclusion,establishing a high effective and efficient link between government and banks is crucial,which will decrease the unnecessary government intervention.Besides,a variety of factors,not just the economic growth rate,should be used to evaluate the local official performance.From the perspective of banks,they should take more efforts on the financial product innovation and increasing the market competitiveness,which are useful to maintain the corporate image and resources. |
