How Confucian Culture Affects The Steady Operation Of Commercial Banks

The nineteenth National Congress of the Communist Party of China listed preventing and defusing risks as the focus of financial work,and took promoting the virtuous circle of Finance and real economy as the main task of future economic work.The 20 th Party Congress continued to emphasize the prevention of financial risks.As an intermediary for the implementation of monetary policy and an important link connecting various economic sectors,the potential impact of commercial banks on the overall macroeconomic stability is more prominent.Behavioral economics points out that in an environment where the formal system is not yet perfect,informal systems such as cultural traditions and social customs play an extremely important supplementary role in resource allocation and contract execution.The general secretary pointed out that Confucianism had a profound impact on Chinese civilization and was an important part of Chinese traditional culture.For China,as an informal institution gradually incubated in historical changes,Confucian culture has the most profound,lasting and extensive impact.So,how does the informal system of Confucian culture affect the management behavior of commercial banks? What kind of economic effect will Confucian culture have on the stability of bank operation? In view of this,this thesis focuses on the relationship between "culture and finance",focusing on the economic effects of Confucian culture,an informal system,on bank management,especially on the stability of bank operation.Based on the Confucian cultural situation,it is of great practical significance to explore the connotation of Chinese traditional culture and deepen the reform of financial supply side.Based on the above background,from the perspective of Confucian culture,an informal system,this thesis selects the annual data of 208 Chinese commercial banks from 2011-2020 as a research sample to systematically examine the impact of Confucian culture on the operational stability of commercial banks and its transmission mechanism.The empirical results show that Confucian culture significantly improves the operational robustness of commercial banks,which is still valid after alleviating potential endogenous problems and a series of robustness tests.The analysis of heterogeneity shows that the promotion effect of Confucian culture is more prominent in regional banks,banks with low liquidity level,banks with high uncertainty of economic policy and banks with low risk resistance.Panel quantile regression results show that there is a structural difference of "asymmetric U-shaped" in the impact of Confucian culture on bank operational stability.Mechanism analysis shows that Confucian culture improves the operational stability of commercial banks by reducing agency costs,strengthening the risk aversion tendency of commercial banks,and reducing the decision-making bias formed by managers’ overconfidence.Therefore,Confucian culture has an implicit restraint mechanism to improve the stability of banking operation.This thesis expands the understanding of informal system in the stability of bank operation and deepens the theoretical understanding of the modern economic significance of Confucianism.