Contractual Analysis On The Commercial Banks

It is an innovation of introducing new institutional economics into finance, and establishing new institutional finance as a new domain. The content of new institutional finance is plentiful and promising to be a forward branch. In China, commercial banks are innovating widely and deeply. In this background, this paper try to conclude and summarize the related achievements of contract theory and research approaches both domestic and abroad, to re-explain related financial concepts from a new point of view. By taking institutional factor as a point of penetration and taking contract as masterstroke, the paper explains related concepts on bases of achievements in contact theories both demotic and abroad, and gives an interpretation of related concepts in financial system from a new point of view. The paper draws its conclusions by experimentally analyzing the reformation process of commercial banking system in China, and studies deeply and systematically in how to reconstruct the contractual relationship of commercial banks, and contributes to establish new institutional finance.The main innovations of this paper lie in the followed points:(l) Introducing contract theory of new institutional economics to finance, and trying to give a new explanation on related concepts and theories, to apply new institutional economics to the study of finance, or to say, to provide a new analytical framework of establishing new institutional finance. (2) Applying game theory to study the mechanism of contract establishment. Since the establishment of contract affected by government, on-banking enterprises and internal management of banks, this paper analyzes the establishment of non-market-oriented credit-loan contract between banks and enterprises in analytical methods of game theory and explains why such contracts are low efficiency (high ratio of non - performing loan). (3) Analyzing the internal financial contracts of commercial banking system .In the light of the special linkage between banks and enterprises, between internal banks and between banks and government, this paper divides the financial contact into three different levers, namely market contract, management contract and government contract, and fosters a specific measure to consummate thesethree sorts of contract. This measure is to reform property rights, to foster rational qualified and perfect contractual circumstances.The main conclusions of this paper are :(1) The related contracts of commercial banking system can be divided into three kinds of contract, including market contract, management contract and government contract. This paper also sets models of game theory for these three kinds of contract and remedies defects of the domestic and foreign research. (2) So far, the real market contractual subjects haven't formed completely in the commercial banking system in China. Since the traders in the financial market are not the property right subjects in real sense, the formality and efficiency of market contracts are weakened o In this case, reforming property rights and fostering rational contractual subjects ,and above all, share-formed are essential to fulfill property rights multivariate. to clarify property rights and to consummate the market contract between banks and enterprises.(3) According to the internal management contract of commercial bank, the principle-agent relationship hasn't been combed smoothly, the beforehand mechanism hasn't been designed perfectly and the fundamental incentive mechanism hasn't been established yet. Without the truly rational distribution of residual property rights allocation, especially due to the un-well matched residual rights of control and surplus claim, the efficiency of financial contract is very low. Therefore, it is necessary to complete incentive regulation mechanism, to consummate decision and distribution mechanism, to cut down agency cost and management expenses, and to enhance the general profit-making ability. (4) The contractual relationship between government and banks is special, with the main characteristics of government intervene, government guarantee and government regulation. These informalities of contract are the main reasons of non - performing loan and are also bad to foster formal market mechanism .In this case, we must reform property rights thoroughly and realize the market-oriented contract between government and banks.The main significance and purposes of this paper are to enrich the achievement of new institutional finance, to provide the effective contractual basement of reconstructing state-owned commercial banking system, to point out the direction of contractual optimization of Commercial banking system in China and to provide related suggestionon realization of innovation goals as well as the new idea of commercial banks dwelling with complicated financial circumstances in the transition process of China's accession into WTO.Due to the above purposes, the paper is organized as follows:Chapter 1 is the introduction. This part provides the background and significance of this paper, introduces the analytical approach and train of thought, summarizes the literatures and points out the breakthrough of this paper.In chapter 2,after combing contractual theories both domestic and abroad, the author introduces the concept of contract to finance and establishes a new theoretical framework, which is the basement of entire paper.Chapter 3 provides three different contractual forms in commercial banking system in China: market contract, management contract and government contract. From the view of transition cost, this part generally looks insight of all these forms and measures the degree of informalities in commercial banks' contract, by using the ratio of non -performing loan rate as a dominant indicator.The main part of this paper is from chapter 4 to chapter 6.By applying normative and positive statements, game theory and comparison approach; this paper systematically analyzes three problems including the contract efficiency (non - performing loan), the establishment contract mechanism and the process of contract optimization.Chapter 7 analyzes the factors, which influence the contract optimization of Commercial banking system in China, directs the contract optimization of Commercial banking system in China, and gives suggestions on realizing reformation goals.Chapter 8 summarizes the main conclusions of this paper and prospects the further study.