Research On The Impact Of Rural Commercial Bank Restructuring On Operating Performance In China

Rural credit cooperatives(RCCs),rural cooperative banks(RCBs)and rural commercial banks(RCOMBs)are the main rural financial institutions in China,and their reform has always been an important part of China’s financial reform.Under the leadership of the government,the pilot work of deepening reform of RCCs in China was officially launched in 2003,focusing on the reform of property rights and organizational structure of RCCs.RCCs in various regions have implemented reforms in diversified modes,such as unified legal entity of county unions and restructuring into RCBs or RCOMBs,according to the actual situation.Since 2011,the joint-stock reform of RCCs has been promoted nationwide,and county level institutions in most provinces have actively and steadily promoted the establishment of RCOMBs.So far,there are still some provinces that have not yet carried out the reform of agricultural commercial banks or are in the process of reform.RCOMBs have gradually replaced RCCs as the most important legal entity in China’s rural financial institutions.Then,what impact does the restructuring of RCCs into RCOMBs have on their business performance? In what ways does the restructuring affect performance? Is there heterogeneity in the effect of restructuring? The existing literature focuses on whether the restructuring of RCOMBs can improve their business performance,but the conclusions are controversial.Some scholars believe that the restructuring of RCOMBs has no significant impact on their business performance,while some scholars believe that the restructuring has significantly improved their performance.Promoting the transformation of RCCs into RCOMBs is still an important task in the future rural financial reform.Therefore,in the critical period of promoting the new round of reform of RCOMBs,it is necessary to comprehensively evaluate the effect of the last round of rural commercial bank reform.The research in this paper can make up for the lack of the current research on the reform of RCCs in China,and can also provide guidance and suggestions for further deepening the reform of RCOMBs and improving their corporate governance mechanisms.This paper first gives a general description of the history and reform process of RCCs,Then,we analyze the changes such as organizational form and property rights system during the reform of the rural credit union system by combining the theories related to corporate governance.And a multi-period double difference model is used to assess the impact of the restructuring of RCOMBs on their business performance.The empirical results show that: first,the joint-stock reform of RCCs into RCOMBs makes the property rights relationship of institutions more clear,and the governance structure more perfect,which has a significant positive impact on their return on assets and asset equity ratio.Second,the reform has improved the profitability and capital adequacy of RCOMBs by increasing the profit margin of main businesses,reducing the rate of administrative expenses,and enhancing the profitability of employees.Third,in the central and western regions,as well as in counties with low economic development,low informatization development and strong government intervention,the restructuring of RCOMBs has a greater role in promoting the return on assets and the reform has a better effect.