Diversification,Interlocking Director Network And Bank Performance

Against the background of deepening interest rate marketization,the rise of digital finance and intensifying financial disintermediation,the spread income of commercial banks in China has generally decreased and the traditional profit model has been greatly impacted,while at the same time,the demand of bank customers for financial services such as consumption,investment and wealth management has been diversified and comprehensive.In order to better adapt to the new normal of economic and financial development,commercial banks in China have been making financial innovations,adjusting their business models and implementing diversified operations.In this context,it is of certain theoretical and practical significance to explore the impact of diversification on bank performance.This paper takes modern Chinese banks from 1932 to 1936 as the research object,explores the impact of diversification on bank performance,and considers that diversification as a strategic decision of an enterprise will not only be affected by the external environment of the enterprise,but also by the internal governance mechanism,and introduces the interlocking director network as a regulatory variable to study how it affects the relationship between diversification and bank performance.The research conclusions are as follows:First,diversification has a positive impact on the performance of banks.The higher the degree of diversification of banks,the better the performance of banks.Second,the interlocking director network has a positive regulatory role in the process of the impact of diversification on bank performance,and the improvement of the richness of the chain director network will enhance the promotion of diversification on bank performance;Thirdly,for banks with different natures,scales,and institutional environments,the relationship between diversification,interlocking director networks,and bank performance is also different.The regulatory effect of the interlocking director network is not significant for state-owned banks,small-scale banks,and banks with poor institutional environments.The innovation of this paper is that at present,most of the domestic research on the relationship between diversification and bank performance takes modern commercial banks as the research object,and this paper takes modern banks as the research object,which can partially eliminate the influence of the government on the relationship between diversification and interlocking director network,and better study the causal relationship between them.Secondly,this paper introduces the interlocking director network as an adjusting variable,and explores its impact on the relationship between diversification and bank performance from the perspective of the internal management of enterprises,expanding the relevant research on the impact of diversification on bank performance.Thirdly,this paper analyzes the heterogeneity of bank nature and bank size,which enriches the role of diversification in influencing bank performance.Based on the findings of this paper,this paper makes the following recommendations for the development of modern commercial banks:on the one hand,banks should choose a diversification strategy that is conducive to their sustainable development,taking into account their own development status,and taking into account the time and place.On the other hand,in the process of implementing the diversification strategy,reasonable adjustment of the internal director structure of the bank should be taken into account,so as to give full play to the positive effect of the chain director network on the bank’s operation and management.