State-owned Commercial Bank Corporate Governance: The Perspective Of The Managers' Behavior In The Formation Of Non-performing Loans

The reform of China's state-owned banks, after 20 years' evolution, now has stepped into a new era, when the core issue concerns how to perfect corporate governance. This dissertation, from the unique perspective of managers' behavior in the formation of NPL (Non-Performing Loan), is devoted to the study of corporate governance in China's state-owned commercial banks.This dissertation chooses managers' behavior in the formation of NPL as its research perspective based on two reasons. For one thing, in the past 20 years' reform, NPL is the biggest headache haunting domestic banks. Unremitting efforts have made it possible for China's state-owned banks to reduce both NPL balance and ratio. However, an in-depth analysis reveals that this seemingly satisfying phenomenon merely results from the concentrated NPL disposition, only scratching the surface. Therefore, this paper aims to elaborate on the formation of NPL in China's state-owned commercial banks in a deeper sense—corporate governance and find out a way to improve corporate governance as well. For another, undeniably, the key to a macroeconomic problem consists in the study of micro-economic behavior; by analogy, managers' behavior provides the microscopic basis for the study of banking behavior.This dissertation researches on corporate governance of China's state-owned commercial banks from the angle of managers' behavior in the formation of NPL. With corporate governance as its core concept, based on the analysis of banking managers' behavior as well as the theory of managers' behavior, this thesis expounds the behavioral characteristics of managers in state-owned commercial banks, taking into account the cultural and institutional environment. Further, this paper, from three aspects, namely, ownership aspect (bank managers versus bank owner), market aspect (bank managers versus corporate managers), regulation aspect (bank managers versus regulators), makes an intensive analysis of the formation of NPL in terms of managers' behavior, and then seeks for the feasible solution to corporate governance of state-owned commercial banks.This dissertation is innovative on the ground that it researches on corporate governance of domestic banks from the perspective of managers' behavior in theformation of NPL. In addition, by exploring the nature of bank managers' behavior in light of managers' behavior theory and cultural environment, this paper comes up with a framework to analyze bank managers' behavior in the formation of NPL, based on the probe into bank managers' behavior from the aspects of ownership, market and regulation.This dissertation points out that corporate governance reform of stated-owned commercial banks should take into full consideration China's culture as well as the history and reality constraints facing banks, and above all, explore the bank managers' behavior. The hub of corporate governance reform is how to coordinate institutional function and economic function so as to maximized the profits of stake-holders. After capital structure diversification, control right mechanism is vital in the following step to address this problem. After the internal governance reform, which is far from enough for perfecting corporate governance of state-owned commercial banks, has some positive effect, importance should be attached to bettering external governance, including government governance mechanism, market governance mechanism and so on. In the process of improving corporate governance, our government should act a more helpful role, for instance, ameliorating government's public governance, establishing an ideal relation between the government and banks, strengthening its institutional function instead of economic function, priority on social construction and the improvement of external environment, a premise for state-owned commercial banks to weaken their institutional function. In the long days to come, the institutional function is unlikely to be absolutely eliminated; therefore, efficiency-oriented reform might not be an optimum choice.