Bank Franchise Value And Robustness Of The Study

The state creates a monopolistic competition market by limiting banking market access and interest rate price, net present value of excess monopoly profits that the bank obtains through its own operations from such a competitive market is franchise value. Franchise value generally consists of two parts:one is market-related revenue that obtains from the government license; the other part is the revenue that obtains from their own business efficiency. From the meaning of franchise value we can see: the origin of franchise value is from external environment and internal mechanisms. Franchise value is the excess return of bank's advantages, the specific advantages include monopoly advantages, liabilities of business advantage, information advantage, transaction cost advantage and reputation advantages.By the end of 2006, "Regulations of foreign banks of the People's Republic of China" had been published, which means China's banking industry has entered a new opening up period. Foreign banks compete with domestic banks, they attract quality customers by "cherry effect", which resulted in lower bank franchise value, is not conducive to the stability of the banking system. Different from foreign commercial banks, in Chinese commercial banks are under long hidden the protection of the country, such protection inevitably would increase the banks' "adverse selection" and "moral hazard", which would result in non-performing loans, so the bank's stability is relatively poor. If we neglect to strengthen the motive of the stability operation, then the competitiveness of the banks, the security of the banks'and the whole finance system will be seriously challenged. Therefore, in the current situation, comparing franchise value self-regulation effect of Sino-US commercial bank is important to increase franchise value and increase the stability of the banks.On this theme, based on the purpose and a unique research perspective, this article will take franchise value and bank relationships as the main line, focus on the following main contents:(1) The measure of franchise value and bank stability. Franchise value generally consists of two parts:one is market-related revenue that obtains from the government license; the other part is the revenue that obtains from their own business efficiency. Tobin Q value includes the two parts, so it can be used to measure the franchise value. There are many factors affecting the stability of banks, such as system and institutional factors, the business environment factors, banking customers the psychological and behavioral factors, the measure of bank stability should fully reflect these factors. However, given the available and feasibility of the index, this article selects LRR, NPL and ROE to measure the bank stability.(2) The foundation theory of the self-regulation effect of franchise value. Basing on financial constraints theory, rent incentive theory and endogenous incentives supervision theory, this part introduces the theory of the self-regulation effect from different point of view, finds that the franchise value can lead the bank to control risks and encourage banks'stability operation. This part also introduces "value-the crisis" model, Park's two-stage model and Keeley's preference model. And then the article derive multi-stage model of franchise value and the bank stability, found that: franchise value can contribute to the long-term stable operation of banks(3) The Sino-US comparative analysis of the relationship between franchise value and bank stability. we construct the econometric model of franchise value and bank stability, use uses the 14 listed banks'unbalanced panel data from 2000 to 2009 and 44 listed banks panel data from 2003 to 2009 to test econometric model. Found that:commercial banks in China and the U.S. all have self-regulatory effect of franchise value; Sino-US bank size and banking stability are positively correlated; China's implicit insurance system weakened the franchise value effect of bank stability; U.S. commercial banks make better use of capital leverage and operating leverage increasing franchise value of banks.(4) Bank stability correcting mechanism based on the factors of franchise value. There is a positive correlation between franchise value and bank stability, the bank's franchise value higher, the better the stability of banks. Therefore, based on the affective factors of franchise value, we select 16 indexes from the market factors and the bank factors, to construct stability of the banks evaluation index system, and construct commercial banks early warning mechanism by BP neural network. And then select the data of U.S. commercial banks 2003-2009 as training samples to simulate, use commercial bank of China data from 2005-2009 as the test samples, and discovers that the stability of China's commercial banks is worse.(5) Suggestions of enhancing the franchise value and increase the stability of China's commercial banks. If banks want to improve their own franchise value, increase the stability of the banks, that is, not only to pay attention to "the relevant part of the bank" (Bank of core competencies), but also pay attention to "the relevant parts of the market" (the government's supervision of banks set policy). So we could increase the core competitiveness of the banks, appropriate to introduce competition mechanism to prevent excessive monopoly, introduce explicit insurance system to increase bank franchise value and enhance the stability of the banks.Based on previous research, this paper innovates in the following aspects:(1) Based on park's model, the article derive multi-stage model of franchise value and the bank stability, found that:franchise value can contribute to the long-term stable operation of banks(2) This article constructs the econometric of model franchise value and bank stability, then use the data of Chinese Commercial Bank from 2000-2009 to test the econometric of model, verify the positive correlation of franchise value and bank stability.(3) And then this article use the data of U.S. Commercial Bank from 2003-2009 to test the econometric of model, and the results were compared with commercial banks in China, found that internal control and external regulation is different from each other, which provide countermeasures to enhance the franchise value of Chinese commercial banks and increase the stability of the banks.(4) This article constructs improved BP neural network of early warning models of bank stability based on the franchise value of factors.The propose of this article is:based on the influence factors of bank franchise value analysis and reflection, take various measures to enhance the franchise value of banks in order to achieve the banking stability, and promote the health development of Chinese banking, and protect the vital interests of depositors, effectively allocate the resources of banks, improve operational efficiency of banks, actively respond to the influence of financial globalization and sub-debt crisis.