Corporate Governance Structure And Governance Effect Relationship Study

This thesis analyzes the relationship between commercial banks corporate governance and governance effects, including risk management, transparency, performance and development mode. Corporate governance has become a global topic. The study of corporate governance has gained increasing attention over the past two decades, partly due to the experiences of financial crises. It has been revealed that corporate governance is critical in maintaining financial market stability. Effective corporate governance helps obtain and maintain public trust and faith on banking system, which is essential to steady operation of banking industry as well as the whole economy. Incomplete and inefficient corporate governance in commercial banks may lead to banks bankruptcy and impact deposit insurance system, which may in turn spread its influence into macro economic system with heavy public cost and serious consequences. Furthermore, incomplete and inefficient corporate governance in commercial banks can reduce the market confidence on banks'ability to manage assets and liabilities appropriately, which may trigger bank runs and liquidity crises.This thesis follows the streams of research on corporate governance of commercial banks, and adopts the theoretical and empirical research methods. Our study shows that corporate governance, bank regulation and market competition are complements to each other. Each of the three aspects is essential in the maintenance of banking stability. Our empirical study shows that ownership structure and regulation influences banks'risk taking effectively, and market competition significantly impacts the results of bank governance. Our study on financial crises also shows the importance of bank governance, industry regulation, and market competition. Lacking of any aspect may jeopardize financial stability.We therefore make the following suggestions. Firstly, improvement of bank governance is to be made on the base of a dynamic and healthy industrial environment,which includes efficient bank regulation regarding information disclosure and risk control, as well as introduction of more competition in banking industry in view of their positive affects on bank governance. Secondly, regarding internal goernance mechnics, we suggest that banks construct reasonly concentrated and balanced ownership structure, and avoid any discrepancy between shareholders voting rights and cash flow rights. We consider such ownership structure helpful in maintaining financial stability due to its apparent positive affects on information transparency and risk control. We also suggest improving the independency of board of directors and increase the percentage of independent members in the board, iri anticipation that the independent board members play more important roles in bank governance.The research of commercial banks corporate governance involves market, organization and behaviour studies. This thesis attempts to do the research in the following innovative ways. First, this thesis contributes to the theoretical framework of bank corporate governance based on the practice of Chinese commercial banks. Second, this thesis provides a framework of effects of bank governance, from four dimensions including risk control, transparency, performance and growth model. Finally, this thesis studies bank corporate governance and provides suggestions to improve bank governance effects from various aspects and dimensions.