Research On The Governance Of City Commercial Banks In China During The Transition Process

Since the mid-1980s, our country has carried on the reform of monetary system in the urban credit associations. After more than ten year baptisms, the city commercial banks not only unceasingly enlarge the quantity and scale, but also the business capacity and they have supported the locus economy as the legal role.With the massive influx of foreign banks, as well as the mature of national joint-stock commercial banks, the competition among China's banking industry will be fiercer. Encounter the challenges from the foreign banks, five state-owned commercial banks and the national joint-stock commercial banks, the city commercial banks in our country has been to a crucial stage. During the past few years, even though a small number of city commercial banks have achieved a breakthrough in the aspects of governance mechanisms, development strategy and management philosophy and so on, but there still exist internal disputes in Bank of Ningbo and the "doll shareholders" case in the Bank of Beijing, let alone most of the other city commercial banks in our country, their situation is even more unsatisfactory.The internal governance issues of our country city commercial banks lie on the non-rational stock structure, clearly controlled by local governments or local governments as a major shareholder of state-owned legal person, imperfect corporate governance structure, nominal of the board of directors and board of supervisors and even no independent directors or independent supervisors, incentive mechanism designed with a strong incentive administration color, lack of the match of long-term incentives and short-term incentive. The external governance issues of our country city commercial banks lie on the disclosure sluggish of information channels, the timeliness and effectiveness. The supervisions of CBRC upon city commercial banks are not in place, the local supervisions are not obvious. The regional financial ecological environment especially the rule of law is relatively large among regions; the punishments on the financial crime are not enough and so on. The existence of the internal governance and external governance issues above causes to the development of most of the city commercial banks is more difficult then other commercial banks and has restricted their sustainable operation and long-term development.Based on the empirical studies of 76 city commercial banks data, we find that the higher the proportion of the mobile unit in the ownership structure, the better capital of the adequacy ratio, and the other ratio was not significant; among the ratios of the board of directors and board of supervisors, the number of the board of directors the board of supervisors is a significant negative correlation to the net equity return, and the other ratio was not significant; the most significant ratios to the performance of city commercial banks are the local law environment, the higher the degree of the local law, the better the capital adequacy ratio, the less the possibility of the occurrence of non-performing loans; the larger the scale of city commercial banks, the lower level mobility; the ratio of information disclosure and social responsibility are not significant to all ratios, which may because that the current reputation of our country has not been set.Finally, in accordance with our country city commercial banks characteristics, and selectively abort the outstanding bank management experience, we give some advice to optimize the management of our city commercial banks. In the aspect of the internal governance optimization, this paper proposes to build an effective property rights relationship among city commercial banks; improve the governance of the board of directors and the board of supervisors and prompt the incentive mechanism of city commercial banks. Concern to the external governance, this paper proposes to improve the regulation of legal system and change the regulation methods; strengthen the information disclosure mechanisms; improve the regional financial environment, especially the local law environment; enhance the social responsibility of city commercial banks.