Chain Banking: Research And Exploration Of The Organization System Of Small Banks In China

Small banks and small business in the same district are usually familiar with each other, often engage in business based on local economy or specialty industry; therefore, long-term cooperation between them decreases the degree of information asymmetry to some extent, so many scholars put forward the famous "Small Bank Advantage Theory" hypothesis, thinking that the natural connection between small banks and small business is beneficial to save information cost, supervision cost of small banks in lending to small business, small banks have advantages of relationship lending to small enterprises; small banks should support the development of small enterprises to solve their financing problems. However, the small banks and small businesses appeared non-cooperative development in China. On the one hand, small banks dislike small enterprises, so its development is out of the market demand foundation of small enterprises; on the other hand, small banks imitate large banks’ business model, and strive for large enterprise customers mutually. In addition, our academic circles also doubt the small bank advantage from time to time, claiming that the Small Bank Advantage Hypothesis is not verified in our small bank markets. In face of the embarrassing situation between China’s small banks and small businesses, considering our small bank market current predicament, reviewing the trend of the small bank bankruptcy and merger in American as the representative of the developed countries, thinking of deepening market reform of banking industry in China, the author cannot help worrying about operation risks of the small banks when protection policy of market access and spread are canceled in China. The author can not help asking whether the chain banking could solve the problems of homogenization competition between small banks and big banks in our country.In order to find the answer to this question, in the process of inspecting and combing the domestic and foreign related research and literature the author found that the domestic research and literature on chain banking is almost blank, it is difficult to look up American literature about the chain bank in China. With the help of the internet, the author downloaded, bought English data from the America Federal Reserve System of archives, Federal Deposit Insurance Company and major library website. However, the existing literature at home and abroad cannot answer the above questions; therefore, the task of this paper is to analyze and solve the problem. It is worth enriching financial theory related to chain banking and guiding the construction of small bank organization system in our country.With the above-mentioned problems, this paper has carried out the analysis and research from theory, experience and lessons of chain banks in practice in US, development dilemma of non-chain small bank and the necessity and possibility of chain banking in China. First, theoretical analysis reveals, chain banking is a small banking organization form based on the financial demand of small businesses, led by the big banks of non-holding company, set up the management and risk control model in accordance with the operation characteristics of small banks and demand characteristics of small enterprises, and the model is carried out in a number of small independent banks by the franchise agreements with big bank in unification, through the sharing of advantages and resources between large and small banks, so as to reap economies of scale; compared with the unit banking, branch banking and group banking, chain banking with economies of scale and scope, less layer of decision-making, higher efficiency, more professional banking business, especially has a comparative advantage in relationship lending to small businesses, and contestable small market is place and mechanism of exerting these advantages. Second, theoretical and empirical research of America chain banking history origin, the path of practice results show that innovation or selection behavior of bank organization system is the comprehensive effect of the internal driving force of banks unremitting pursuit expected benefit and social economy, legal system and other inducement. American bankers created chains banking system in the late nineteenth Century, and with the change of the social economy and the legal system condition, they still learn widely from others’ strong points, and constantly improve the "American native" bank organization system, so that the Federal Reserve identify the chain bank with "the predecessor of modern Banking Holding Company" in the 1930 s, especially in the 1950 s to the mid of 1970 s, with the promulgation and implement of "Banking Holding Company law", "Bank Merger Act" and other laws in US, chain bankers based on maintaining comparative advantage chain banking, widely adopted approach of Banking Holding Company, branch banking, and create a "upgraded version" chain banking-- bank chain group system, even the First Interstate Bancorp as a chain banking group has been named one of the best banks and ranked the top 100 largest publicly traded banks(ranging in asset size from $6.4 billion to $2.5 trillion) in America by Forbes Magazine. In this paper, the results of the empirical analysis showed significant correlation with variables of competitiveness, industrialization, urbanization. Although the chain bank has much contribution, but because the chain banks have nature of circumvention the branching restriction of supervision authorities at the beginning, chain business model involving trade secrets, the chain bankers remained tight lipped about their own operating conditions, regulators think that chain bank management is not yet fully important or evil to cause people to alert and does not need special legislative or special supervision, and no legal mandatory requirement information disclosure of chain bank in American history; therefore, chain banks did not become popular vocabulary in academic research or statute law, but has become banking "unknown hero" in America, of course, in the special history under the background of development, also speculation, regional monopoly and randomicity problem spreaded in chain banking in America. Third, through the research of the development of non-chain of small banks, this paper argues the development of China’s small bank into a regulatory dilemma and relationship lending quagmire; in order to break the double predicament, make up the bank market defect, easing financing difficulties of small business, it is necessary to establish a chain banking to meet small business financing needs and satisfy a strong desire of private capital into the banking industry, numerous small financial institutions and the existing policies and regulations and the trend of its development increase the feasibility of the establishment of chain banking in China.According to the actual situation in China, learn from the good practices and experiences about chain banking, franchise and other aspects in America, respectively from the perspective of enterprise organization and industrial organization, try to construct organization system of bank chain and internal organization structure and operation mechanism of chain banking system, explore the organization boundary problems of chain banking system, those point out that the chain banking system is not that the bigger is the better. In addition, this paper also analyzes possible problems in the construction of chain banking and thinks of its countermeasures.