Research On Impact Of Equity Structure On Risk-taking Of China’s Urban Commercial Banks

As one of the important financial institutions in China,urban commercial banks assume an important role in developing the local economy and linking small and medium-sized enterprises.At present,China’s urban commercial banks have gained rapid growth through capital attraction,crossregional operation and joint restructuring,but they have also gradually exposed some risk problems,such as the risk disposal of Jinzhou Bank in 2019 and the liquidation and restructuring of Baoshang Bank in 2020.The shareholding structure is the core of corporate governance.It has an important impact on the operating performance and risk-taking of urban commercial banks.The shareholding structure of China’s urban commercial banks is very heterogeneous compared with other financial institutions.They are mostly local government shareholdings,with most being local state-owned enterprises and government acting in concert.This is highly susceptible to governance risks.This thesis explores the impact of shareholding structure on the risk-taking of urban commercial banks,which has theoretical and practical significance for urban commercial banks to better serve the local area,promote the development of the economy and comprehensively deepen the multi-level reform of China’s financial sector.This thesis selects panel data related to a total of 41 urban commercial banks in China’s east,central and west economic zones from 2013-2020.This thesis selects the NPL ratio and the weighted risky assets ratio as risk-taking measures.It selects several variables to measure the equity structure from three dimensions of equity concentration,equity checks and balances,and innovatively introduces the variables of executive shareholding,state-owned shareholding and foreign shareholding.Stata software is used in the empirical analysis of the model.The relationship between equity concentration and risk-taking is first investigated and a significant U-shaped relationship is found,with higher risk-taking associated with both lower and higher equity concentration.It also examines the relationship between equity checks and balances and risk-taking and finds that increased equity checks and balances can reduce risk-taking and promote better corporate governance.Then,the relationship between equity attributes and risk-taking is analyzed.It finds that the attribute of the first largest shareholder being state-owned significantly increases the risk-taking of the bank.Both an increase in the percentage of state-owned and foreign ownership of the majority shareholder leads to higher risk-taking.Finally,this thesis analyses the combined effect of the three dimensions of equity structure on risk-taking in city banks and makes robustness tests to confirm the stability of the model.Based on the above findings,this thesis proposes that the equity structure of urban commercial banks should be optimized.It should be optimized in various aspects such as equity concentration,equity checks and balances and equity nature.It should also enhance risk control,actively promote the listing of China’s urban commercial banks,construct a reasonable information disclosure mechanism and strengthen the supervision of shareholders,so as to improve the risk control ability of China’s urban commercial banks.