A Study On Banking Supervision Performance Evaluation Of Chinese Commercial Banks In The Perspective Of Risk And Return

As the core of the whole financial system, banking plays a decisive role in the development of the real economy. The objective existence of market failure makes that the banking regulation must occur. An effective banking regulation is the essential condition to make sure the sustainable operation of the banking, maintain the security and stability of the financial system, and promote the healthy development of the real economy. In our country, because of our continuous economic system reforms, banking regulation has several changes. After more than ten years since the State Council set up CBRC(China Banking Regulatory Commission)to exercise its function of the banking supervision independently and finally form the model of financial supervision of "one of three" since 2003. Great changes of world economic and financial situation were occur in these years, especially in 2007 the international financial crisis resulted from subprime mortgage crisis happened in U.S.A. has far-reaching effects in economy and finance of the world including China. However, as one of the important Emerging economies, our country faces tests of complicate and grim economic and financial situation while economy is rapid development, such as, prominent issues and problems of unequal, inharmonious, unsustainable affecting economic development, coexistence of downward pressure of economic growth with inflationary force, potential risks should never be neglected in finance and property areas, intense pressure for reform and transformation in banking. Under this Economic and financial environment, how was the performance of banking regulation and supervision in our country? How is the development of banking supervision in our commercial banks, what are the problems and the reason why? How is the quantize level of regulation and how to improve our commercial bank regulation performance? It has to become an important question concerned by compatriots.From the point of view that theory should be combined with practice, this paper analyzes and expounds supervision performance of our commercial banks and its characteristic, broadens the intension and extension of our banking supervision defined by academia. It advances that our commercial banking supervision, in the broadest sense, is about supervision including "embedded supervision" with Chinese characteristics which means the government will directly participate in the management and development of bank essentially and make supervision seep into corporate governance in bank. At the same time, it demonstrates that as the main body of our commercial bank supervision, the government contains central government and local governments forming system of two-tier supervision with multiple regulatory agencies, and our supervision object presents dual nature which means both safety and effectiveness in external supervision and "embedded supervision".This paper analyzes our commercial bank supervision performance in present and reviews the development and practice of our banking regulators supervision, local government supervision and "embedded supervision" of commercial banks. It also analyzes and summaries the existing problems in our banking supervision, including our government presents a difficult position in banking supervision, the effectiveness of banking supervision should be further improved, local government over regulation negative effect highlights.Based on dual nature of object which demonstrates higher "venture benefit" for both safety and effectiveness in external supervision of commercial bank, from the point of view for better control financial risk to maintain the security of banking and whole finance and economy or even to promote the development of economy, considering the trinity-characteristics of banking supervision system of Chinese commercial banks, the People’s Bank of China, the CBRC and the local government, using entropy method to put forward a comprehensive index systems of the overall level of risk control and comprehensive efficiency of banking supervision performance in China. And making an overall situation analysis and empirical study of external supervision of commercial bank performance, the author comes to the conclusions that the amount of penalties on illegal transactions is uncorrelated with the comprehensive efficiency of banking supervision of Chinese commercial banks, and the capital adequacy ratio, the Loan to deposit ratio, the percentage point of the non-performing loan rate that city commercial banks is higher than the national joint-stock banks are negatively correlated, and the change amount on the total assets of the People’s Bank, the local and foreign currency loan balance are positively correlated.This largely remedies the defect that academic does not bring local government regulation into the line with the study of our banking supervision all the time and only evaluates external supervision performance of commercial banks either from safety or effectiveness respect.Based on dual nature of object which demonstrates higher "venture benefit" for both safety and effectiveness in "embedded supervision" of commercial banks, from the point of view for better controlling its total risks of all banks, to fulfill favorable management benefit. This paper analyzes the relationship between corporate governance and the level of overall risk control and comprehensive benefit of commercial banks using two comprehensive index systems of the level of overall risk control and comprehensive benefit of banks, sets up the panel data model fix influenced by "embedded supervision" performance of our commercial banks, and research the performance by empirical analysis. It is concluded that the state-owned holding capability, scale of the board of supervisors, and the number of senior management with the government background is negative related to the "embedded supervision" performance, and scale of the board of directors, directors and supervisors with the government background is not related to them. This largely remedies the defect that academic only evaluates "embedded supervision" performance of commercial banks either from safety or effectiveness respect.Finally, this paper briefly concludes the experiences in banking supervision system, methods and manner, information construction, personnel management and inspiration in the world in the perspective of venture benefit. And combined situation analysis and empirical research, this paper gives some countermeasures and suggestions about improving our banking supervision performance from improving our experiences in banking supervision system, methods and manner, information construction, personal management and supervision function of the local government.