Imperfection Of Governance Structure And The Prudential Regulation Of Commercial Banks

Corporate governance and financial regulation generate sufficient attention in recent twenty to thirty years. A variety of international and local research institutions have been established and their researches are fruitful. At the same time, different countries have drafted some concrete policies in accordance with the situation in their countries to promote the establishment of the criterion for the corporate governance and the efficiency of the financial regulation. Different from the extant literature which separates them, the dissertation incorporates the findings in these two areas and attempts to enrich the coordinating development theory of the commercial bank's regulation and governance.Commercial banks, as important financial institutions, mostly take the form of corporations. Therefore, they will confront the governance facing all the corporations. But compared with other corporations, banks have different capital structure. Many banks are state-owned. The instability of banking system stems more from the external factors rather than the internal ones. And at the same time, banks are subject to the more rigid regulating policy. All these constitute the particularity of the banking governance. It's these nature and properties of the bank industry and its influence on the national monetary policy that makes the regulation of the bank industry necessary. Therefore there is great and necessity and possibility for the coordinating development of commercial banks' governance and regulation.Taking commercial banks' governance and regulation theory as the fundamental, the dissertation explores the particularity and the arrangement of the bank governance, and the balanced development of the banking governance and regulation. The dissertation consists of 5 chapters.The first chapter is an introduction.Chapter 2 is a survey of the theories of banking regulation and governance and serves as the fundamental for the analysis of the dissertation. The first section is the survey of the corporate governance theory. The governance mechanisms are divided into two types: internal governance mechanism and external governance mechanism, represented by Japanese-German and English-American model respectively. Corporate governance theory lays a basis for the governance of commercial banks. The second section pursues a comparative study of commercial banks' governance and non-financial corporate governance. It points out that banking regulation is the most remarkable difference. The third section gives a survey of the traditional banking regulation theories, and makes evaluation on these theories. The fourth section is therecent developments of the banking regulation theory, which is embodied in the new Basel Agreement.The third chapter is the theoretical exploration of the commercial bank'sgovernance. Based on the corporate governance theory, the chapter takes intoconsideration of the particularity of commercial banks and concludes that theimperfection of commercial banks' governance structure determines the bankingregulation as the complement of the banking governance. The first section addressesthe new advances in the field of corporate governance梑lending corporategovernance mechanism. Based on this, the "functional perspective" of the corporategovernance is proposed; The second section applies the principal-agent theory and thefinancial actor's limited reasonable behavior theory to analyze the ingenerate risk andthe instability of the bank, which determines the complementary relationship betweenbanks' governance and regulation. It argues that the decentralization of creditors leadsto the debt governance mechanism's defect during the operation of the bank, which isthe banking governance's ingenerate defect. It can be remedied by the practice of"supervisor as creditor". The third section analyzes the "representation hypothesis"and further clarifies the complementary role of the regulation to governance. Thefourth section is the governance of commercial...