| Innovation is an eternal topic. As the reformation of interest rate liberalization further promotes, the supervision of capital tightens, and the transformation of economic structure gradually progresses, banks are seriously challenged for their role as the intermediaries of social financing and payment, the traditional pattern of growth in China’s banking industry where the major source of revenue is based on the interest income is hard to sustain, which forces commercial banks to change their traditional operation and profit model rapidly. Thus, creating the external environment conducive to innovation and fostering the internal motivation for innovation in the innovation subject has become an important issue to determine the success of commercial banks for further reform. This paper builds a conceptual model for the formation mechanism of commercial banks’ innovative capability in our country, by emphasizing the six dimensions which contains external factors and internal factors respectively, systematically discusses the formation mechanism of the commercial banks’ innovative capability, and employs dynamic panel model for empirical analysis, thus indicates the special formation mechanism which affects Chinese commercial banks’ innovative capability. Meanwhile, it also tests and verifies the influence of commercial banks’ innovative capability on banks’ performance. Based on theoretical analysis and empirical analysis, making a thorough investigation on the special background and underlying formation causes of commercial banks’ innovative capability and discovering its formation mechanism all contribute to understanding the unique features of each phase in the development of China’s banking industry. Thereby, the effective way to promote the innovative capability of banks can be found, and the successful transformation of the banking sector and the improvement of the overall performance can be achieved in the end.The dissertation is composed of the following seven chapters, of which Chapter Ⅰ is Introduction and Chapter7is Conclusion and Future Research Direction.Chapter2concentrates on the literature review of related topics. This chapter systematically reviews and combs through the related research literature about the innovative capability of commercial banks around the world, then proposes the defect of former studies and direction for further study. Chapter3emphasizes on the theoretical analysis of the formation mechanism of commercial banks’ innovative capability. This chapter firstly defines the elements of commercial banks’ innovative capability and evaluation indexes of the measurement; secondly, by respectively emphasizing on six dimensions which contains external factors and internal factors:the exogenous mechanism formed by the level of economic and financial development,"dividend effect" and the risk supervision of the banking sector, and the endogenous mechanism contained by resources invested in commercial banks, corporate governance and "soft power", the conceptual model for the formation mechanism of China’s commercial banks’ innovative capability are built. It also discusses in detail the formation mechanism of commercial banks’ innovative capability, and provides the related hypothesis to test.Chapter4focuses on empirical analysis of the formation mechanism of commercial banks’ innovative capability. This chapter tests and analyzes the quantified exogenous factors and endogenous factors in the formation mechanism of commercial banks’ innovative capability. The empirical results verify the theoretical hypothesis on the one hand, and also obtain some instructive results on the other hand.Chapter5empirically analyzes the influence of commercial banks’ innovative capability on bank performance. This chapter concentrates on investigating the relationship between commercial banks’ innovative capability and bank performance under the conditions of risk management and control. Via the empirical analysis, the research finds a significantly positive relationship between commercial banks’ innovative capability and bank performance, and also the influence of innovative capability on bank performance are not exactly the same as for different banks with different natures.Chapter6proposes the enhancement strategy and policy recommendations for commercial banks’ innovative capability, based on the theoretical and empirical analysis.Through the aforementioned studies, the major conclusions of this paper are as follows:1. During the transformation process of the formation mechanism of China’s commercial banks’ innovative capability, the factors affecting this formation process are in many aspects, which can be divided into two categories:one is the exogenous mechanism contained by the level of economic and financial development,"dividend effect" and the risk supervision by banking sectors, and the other is the endogenous mechanism contained by resources invested in commercial banks, corporate governance and "soft power", the results of their joint effect form the formation mechanism of Chinese commercial banks’innovative capability for the current stage. Additionally, the formation of commercial banks’ innovative capability is a dynamic process of development, and the characteristics of each stage in the evolution process are relatively obvious.2. The qualitative research aspects. Based on various industry-specific regulatory measures and indicators in Basel Ⅲ Agreement, commercial banks’ innovative capability will inevitably be affected. The implementation of new supervision standards will strongly promote the development and transformation of the banking sector, especially under the constraint of capital regulations, which promotes the change of banks’ business structure from high level of capital occupied to the low level, and forces banks to seek a variety of innovative methods to increase its profitability. Moreover, the synergistic effect of the strategic management model of commercial banks’ innovative capability, excellent corporate culture, the motivation system for innovation, the bankers’ charismatic leadership, and the process rccngincering of banks, indicates the "soft power" of commercial banks. Such "soft power" is also the important productive force for commercial banks, which can efficiently integrate all kinds of internal sources of banks, and promote the formation of commercial banks’ innovative capability from various dimensions.3. The theoretical and empirical aspects. Firstly, during the process of institutional transformation of China’s commercial banks, the high level of national saving rate makes commercial banks able to enjoy the demographic dividend in the reform process, and the long-term control of interest rate creates a rent opportunity to commercial banks. Such "dividend effect" leads to the banks’ lack of motivation to innovate. Simultaneously, the negative relationship between China’s currency rate and banks’ innovative capability, and that between the financial structure indicators and banks’ innovative capability reflect the investment-driven pattern of Chinese economic growth. The rapid economic growth and the large-scale credit lending are highly related. Furthermore, the extraordinary growth of the banking credit results from the additional issue of capital, and the one and only monetary bonus owned by commercial banks in monetization process can not improve banks’ innovative capability. Therefore, it fails to promote the efficiency of the financial allocation of social resources and the deepening of finance. Secondly, the corporate governance of commercial banks plays a leading role in banks’ operation, and good governance structure can enhance banks’ efficiency in resource allocation and also boosts the innovative capability. The research finds that the reasonable equity structure can promote banks’ innovative capability, as the negative effect of the largest shareholder due to the majority interest is obviously more than the positive effect of promotion of innovation brought by him. The appropriate dispersed ownership, via the active participation in governance by other shareholders can increase banks’ innovative capability. The existence of the state implicit guarantee causes the state-owned banks to invest more resource in innovation, as well as bears more innovative risk. As the core of bank governance, there are a large number of the board of directors of banks in China, which increases the cost of cooperation and coordination, reduces the decision-making efficiency, and does not motivate the further innovative capability. What is worse, the effect of the system of independent directors and board of supervisors, and its independence do not fully give full play to its role. In contrast, the rational salary incentive system for executives can improve commercial banks’ innovative capability evidently.Finally, banks’ investment of resources is the foundation of innovative capability. The study finds that, the scope effect of the application for commercial banks’ innovative development provides a strong support for marketing competition of the multi-product banking. The expansion of economies of scale is largely realized by setting up more branches, but the expansion of such a scale can not improve the innovative capability effectively. Using technical applications can effectively reduce banks’ operating cost, so as to promote the transformation of operating structure and the change of development methods. Therefore, electronic banking automatically becomes the trend of banks’future development. At the current stage, the market share of commercial bank industry is mainly indicated by the size of deposits and loans, the key source of profitability for banks comes from the dividend policy, but which can not effectively improve banks’ innovative capability. Additionally, human capital and the compensation bonus for bank employees are positively related to the innovative capability, which shows the core role of talented people in promoting banks’ innovative capability.4. Commercial banks’ innovative capability has a significantly positive effect on banks’ performance, so that banks are able to enhance their operating performance by improving innovative capability. Also, it is found that, the innovative capability of joint-equity and city commercial banks and state-owned commercial banks all positively affect banks’ performance, but the degree of such effect are quite different for different banks. The enhancement of innovative capability is more important for joint-equity and city commercial banks to improve its performance.Based on the theoretical analysis and empirical analysis of the formation mechanism of commercial banks’ innovative capability, we find the unique and underlying formation causes. Accordingly, proposing more targeted policy recommendations can improve the overall innovative capability in the banking sector by many aspects such as implementing the market interest rate pricing mechanism and the connotative development of capital intensive, optimizing the bank’s endogenous resources investment, constructing the governance mechanisms which are conductive to innovation, and strengthening the construction of banks’ soft power, which are the only ways for China’s banking industry to achieve the transformation of its development model. |
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