Governance Reform Of State-owned Banks Based On Hierarchical Governance Theory

By adopting as analytical tools the theories of transaction cost and industrial economics, the thesis first explores the preconditions and economic causes of hierarchical governance mechanisms from the perspectives of assets exclusivity and industrial reorganization, and then analyzes the characteristics of business firm in the integration of principal-agent relation with production factors as an organization with hierarchical structure. The thesis argues, due to the existence of hidden knowledge and information dominance, the business firm as a hierarchical structure features the rent dissipation of self-organization which converges to the frontier of X-non-efficiency in the principal-agent relation, while in the integration of production factors, due to the incompleteness of contract, the hierarchy as a strategy for team production may grant the agent the control of productive capital and the claim related to equity capital. Meanwhile, the reform of production organization of modern business firm enables the hierarchical organization to enhance its efficiency through internalized market and organizational breakup.Based on the theoretical framework of hierarchical governance, the thesis probes into the issue of hierarchical governance in the property rights reform of China state-owned banks. It demonstrates that the drawbacks related to hierarchy management and organizational structure still exists in the property rights reform of state-owned commercial banks due to their huge traditional hierarchical structure and existing management problems. Finally, the thesis concludes that the reform of state-owned banks shall be pushed forward from the perspectives of constraint mechanisms and organizational innovation of hierarchical governance. As for the constraint mechanisms of hierarchical governance, the thesis purports to optimizing the efficiency of bank's governance structure and external and internal mechanisms while applying incentives to enhance efficiency of hierarchy. On the other hand, by watching closely the transformation of organizational structure of global banks, China state-owned banks shall balance between the strategies of centralization and decentralization to carry out effective reorganization and integration over business operation units, operational procedures and organizational structure.