Research On Organization Reconstruction Of China's Large-scale Commercial Bank Based On The Principal-agent Theory

Large commercial banks in China's financial system as the main part, is currently facing regulatory environment change, change the mode of development and the important business transformation period, the existing organization structure to support the strategy of steady progress, not only affects the ability of sustainable development, but also to the Chinese financial system is crucial to development of health science. Although the large commercial bank organizational structure system is continuously improve and optimize. However, due to the transition from specialized banks, under the planned economy mode of administrative decentralization on its organizational structure and operation of far-reaching influence, block management is a large commercial bank under the management of branch from the main way, is essentially a form of uniform law of human under the system of commercial bank is divided into numerous independent interest plate, principal-agent problems, is a direct result of large commercial banks sustainable development ability is low.This paper reviews the relevant commercial bank organization structure reengineering the related literature, to the "different forms of organization for large commercial banks internal principal-agent problem effect" as the study subject, from the international advanced bank organization structure reengineering on the principal-agent problem management effect study start, on the analysis of current commercial bank organization construction status and the resulting principal-agent problem on the basis of the headquarters and its branches, with the internal organization of the principal-agent relationship as the study object, relying on the principal-agent theory, combining the theoretical model, empirical analysis and case study analysis, verification method, try to answer the following question,"why different forms of organization for large commercial banks the principal-agent problem of different degree effect?" Through study and analysis of large commercial banks internal principal-agent formation reason, analyzed the organizational restructuring to improve the internal principal-agent problem of level of management, to solve the principal (head office) and agents (branch line) between different interests, to strengthen the supervision to the agent, to achieve the two incentive compatibility, to promote the client's strategic management and risk control in the important role of. Finally, puts forward the organization structure reengineering policy recommendations.This study concludes the following foundings:(1) in the current situation, commercial banks are facing the profit mode transition, promote sustainable development period. The principal (head office) and agents (branches) formed between both to the pursuit of maximum profit and promote the current strategic business (such as small business credit, intermediate business etc.) development multi task principal agent relationship, lead as an agent of the branch bank interest and the principal is inconsistent, causing agent opportunism agent problems, influence the client's scientific decision and the strategic objectives of the implementation of the arrival; because the lengthy principal-agent chain, resulting in the total branch between the information asymmetry, the principal to agent supervision out of control, easy-induced agent moral hazard. So that the large commercial banks the principal-agent problem in number and extent have further increased and the aggravating trend. The problem is essentially the principal (head office) and agents (branches) the incentive conflict results. With the large commercial banks which are born in the planned economy mode of administrative decentralization system based on U organizational structure has a direct relationship. Through reconstruction of organization structure, banks can effectively solve the incentive conflict caused by the principal-agent problem. Its mechanism of action is, through the organization structure reengineering of organization decision making authority distribution adjustment, at the same time on the agent's performance evaluation and incentive system for the corresponding improvement, to change the original between principal and agent a series of explicit and implicit contract, make the interest of principal and agent target becomes uniform, thereby helping to reduce between principal and agent incentive conflicts, to achieve a large commercial bank diversified objectives of effective implementation and control of risk increase.(2) according to Holmstrom and Milgrom (1991) creation of multi task principal agent theory, through the construction of large commercial banks between principal and agent as the motivation and goal asymmetry agency cost model, the analysis and validation in a single operation target and a single excitation mode, the client and the agent cost minimum, maximum net income as a result of this agent. And based on the above studies, this dissertation proposed through reengineering the organization structure, the current U organization structure to the M organizational structure change of direction of the overall train of thought, on the one hand, through improving the organization's internal business specialization degree, make agent target single, improving information symmetry; at the same time, through expanding agent in a single strategic the task of decision-making power, to improve agent development strategical the task initiative. To carry out other tasks are weak incentive agents, to carry out strategic business strong incentive. On the other hand, in advance to the M organization structure change, the agent's motivation mode to a single design, in order to improve the mission entrusted to invest time and experience on the marginal revenue.(3) based on the2006-2010,96banks of279annual sample data the empirical analysis results show that: Overall, reengineering the organization structure can increase the commercial bank's performance, reduce the risk. For listed and unlisted banks, reengineering the organization structure can improve the performance of listed banks, private banks performance bound. For large commercial banks, joint-stock and city firms, organizational restructuring of joint-stock bank performance positive effect due to state-controlled banks and city firms, for large commercial banks and city firms risk inhibition than joint-stock commercial banks; the agency cost, reengineering the organization structure can reduce the agency cost of large commercial banks. The conclusion, as the large commercial bank organization structure reengineering can reduce agency cost, promote the improvement of management performance role provides validation and having certain theoretical guidance meaning.(4) a large commercial bank organization structure reengineering should fully draw lessons from foreign advanced bank based on successful experiences, both centralized and decentralized, readjust the head office and branches of decision-making power distribution, through the management level of flat, vertical management, matrix type of risk control, establishment of regional service processing center, to achieve arranged in a crisscross pattern matrix management structure and processes to the bank's business operation mode, thereby effectively reducing information cost and agency cost. With previous large-scale commercial bank organization structure reengineering, although based on M structure, but is a comprehensive system to consider. One, the mode of the reengineering although from headquarters stratification plane is the decentralization mode, but due to the center of gravity moves, in its interior is highly centralized, is conducive to improve the principal-agent problem, while taking into account the decision-making efficiency and customer service improvements. Two, reflect the systematic and institutional design compatibility features, rather than simply emphasized promoting management level and flat or business unit, one dimension. The three is, will be built with the new organization structure is adapted to the incentive and constraint mechanism and the performance appraisal system as the important content in reconstruction of organization structure, make the principal agent incentive comprehensive, system, compatible.The main contribution of this paper lies in: first, construct the organizational structure, agency and large commercial bank organization structure reengineering and other relevant theories frame inner link, with new analysis perspective that economics analysis method to study the organizational restructuring of large commercial banks to reduce principal-agent problem action. Second, the large commercial bank organization structure reengineering activities as the adjustment of principal and agent, the contract between the principal and agent, to solve the incentive conflict are important mechanisms for study and consideration, further expansion of the enterprises organization management theory on principal-agent problem. Third, to further enrich the large commercial bank organization structure reengineering research perspective and analysis method. Through the construction of large commercial banks between principal and agent as the motivation and goal asymmetry agency cost model, the analysis and validation of "on the single objective and a single excitation mode, principal and agent cost minimum, the agent of maximum net income" this result. And based on this, proposed the large-scale commercial bank organization structure reengineering of the overall train of thought. Fourth, this paper studies further the expansion of the Commercial Bank Organization Structure Reengineering Research depth. Innovative from the perspective of empirical analysis of organization structure reengineering of commercial banks' operation performance, risk and agency cost effect. The existing literature on bank organization structure reengineering research from practice point of view, fresh from the empirical perspective.The results of this study for large commercial bank organization structure reengineering has important policy implications:(1) a large commercial bank existing decentralized organizational structure, as is born in the planned economy mode under the administrative decentralization, with typical U organization characteristics, resulting in the agent and the principal different interests brought the principal-agent problem is the existing organizational structure endogenous, is unable to effectively overcome. Only through organizational restructuring, change agents of interest, increase pair of agent execution principal task constraints, can promote to realize the target of client diversification.(2) as a result of commercial banks are unique to the principal-agent problem of the complexity and particularity, in reconstruction of organization structure, the client should not only focus on the headquarters and its branches through the adjustment between the decision-making power, promote the agent and the principal goal of interest tends unified, prevent opportunistic behavior of agents; and by considering how effective institutional arrangements to strengthen agent constraint, to improve the supervision to the agent, to prevent the agent's moral hazard.(3) reconstruction of organization structure cannot accomplish at one stroke, therefore, must have a good grasp of organizational restructuring of orientation, a deep understanding of the connotation of organizational structure, selection of reengineering the organization structure of the logic order advance, the establishment of a comprehensive, systematic, scientific organization reconstruction planning. On this basis, to determine a good implementation steps, path and corresponding measures in advance, system, prevent to do single institutional arrangement.(4) in view of professional business center to improve the strategic target of the ground the principal-agent problem effectively, some of the new business and strategic business, such as the small business credit, credit card, investment banking, as there is no greater burden of history, and the existing hierarchy management of traditional business cross is not, in the organization restructuring can be one step ahead, directly from the implementation of head office to the grass-roots branches of business lines, vertical specialization, division of the business model, given the necessary property of people power, strengthen the independent management and motivation, with institutional advantages to further promote the rapid development of the business.