Banking Supervision,the Identity Of Large Shareholders And The Operation Of Banks

The sub-prime crisis of America exposes the loopholes and deficiencies of bank supervision.After the financial crisis,most countries have carried out the reform of bank supervision.The Basel III is introduced internationally,new regulations on capital supervision are made,and liquidity supervision framework is constructed in the aspect of liquidity supervision.The financial system of developing countries is relatively backward.In the past few decades,most developing countries have promoted financial liberalization through the elimination of capital control,bank privatization,interest rate marketization and access opening.On the one hand,the developing countries have promoted the development of the finance,and on the other hand,it has also increased the financial risk.Most of the financial systems in the developing countries are mainly banking financing system,and the stability of the banks is crucial to the whole financial stability.Therefore,it is of great significance for the developing countries to strengthen the banking supervision and prevent the bank risks.In terms of bank ownership structure,the ownership structure of the banks in developing countries is more concentrated and generally has large shareholders,which has an important impact on the operation of the banks.Through sorting out previous studies,it is found that there is relatively little comprehensive research on the banking supervision,the identity of large shareholders and the operation of banks in developing countries.The paper selects 357 bank data of 43 developing countries,which are the same as China’s development stage,and use the system GMM method to analyze the correlation between bank supervision,the type of large shareholders and bank risk,bank supervision,the type of large shareholders and the CAMELS index.Bank supervision includes general supervision and 12 types of sub item supervision,which include entry into banking,ownership,capital requirement,activities restrictions,external auditing requirements,internal management/organizational requirements,liquidity and risk diversification,depositor(saving)protection schemes,asset classification provisioning and write-offs,accounting/information disclosure,discipline/problem institutions/exit,supervision.The major shareholder types include large shareholders of government,large shareholders of industrial enterprises,large shareholders of financial enterprises,large shareholders of family and large shareholders of foreign capital.Bank risks include total risk,credit rating risk and bankruptcy risk.CAMELS index include capital adequacy,asset qualities,management costs,earnings and profitability,liquidity,sensitivity to market risk.In addition,the development of private banks in China has just started,and the regulatory system needs to be improved.Therefore,combined with the empirical analysis of developing countries,this paper aims at the problems existing in the supervision of private banks in China,and also discusses the supervision of private banks in China.The main conclusions of this paper are as follows:Conclusion one:the overall supervision of the developing countries can reduce the overall risk,credit rating risk and bankruptcy risk.The large shareholders of industrial enterprises and financial enterprises can reduce the overall risk of the bank,and the bank credit rating risk with large family shareholders is higher.Capital supervision,internal management supervision,deposit insurance supervision,information disclosure regulation and supervision can reduce the overall risk,credit rating risk and bankruptcy risk.Strict access control can reduce the overall risk,but it will increase the risk of credit rating,and has no significant impact on the risk of bankruptcy.Ownership regulation will increase the risk of credit rating,but it can reduce the risk of bankruptcy.External audit supervision will increase the overall risk and bankruptcy risk of banks and reduce the risk of credit rating.Liquidity regulation can reduce the risk of bank bankruptcy,but the overall risk and credit rating risk is not significant.Asset classification and disposal regulation can reduce the overall risk and credit rating risk,but it will increase the risk of bankruptcy.Strict exit regulation can increase the overall risk and credit rating risk of banks,but it reduces the risk of bank bankruptcy.This can be explained by ’too big to fail’.Conclusion two:the overall supervision and capital supervision of developing countries increase the total capital equity ratio,but reduce the total capital ratio,which indicates that regulation has a certain time lag for increasing capital adequacy;almost all five types of large shareholders have a positive correlation with the bank capital adequacy ratio,indicating that the banks with large shareholders tend to be more inclined to the capital adequacy ratio and raise capital reserves to prevent bank runs.The correlation coefficient between the shareholding ratio of large shareholders and capital adequacy is negative,which means that the higher the control rights of large shareholders are,the more inclined to reduce the capital adequacy ratio of banks.Overall supervision and asset classification refer to cancellation of sub item supervision,which can reduce loan loss preparation rate and non-performing loan ratio.The banks owned by the government,industrial enterprises and foreign major shareholders have low non-performing loan ratio and low loan loss reserve rate.The banks of financial enterprises and family owned large shareholders have a higher non-performing loan ratio and a higher loan loss reserve rate.The higher the shareholding ratio of large shareholders,the higher the loan loss preparation rate of banks.Overall supervision and internal management require sub regulation will increase bank costs,indicating that bank regulation is cost effective.Management costs are negatively related to government,industrial and financial companies and family owned banks,but are positively related to the proportion of foreign banks and major shareholders.The results show that banks with large foreign capital in developing Chinese furniture can not manage the cost effectively as host banks do.In addition,the higher the shareholding ratio of large shareholders,the higher the cost of bank management.The overall regulation has reduced the profitability of banks,but business restrictions have increased the profitability of banks.Although the proportion of the large shareholders is negatively related to the profitability of the bank,the banks with government,industrial,financial and family large shareholders are more profitable than those without large shareholders.Overall regulation and liquidity sub regulation can improve bank liquidity.On the whole,banks with large shareholders such as government,financial companies and family are less mobile.There is a positive correlation between bank liquidity and shareholding ratio of large shareholders.The overall supervision and supervision efficiency can reduce the sensitivity of bank market risk and help banks cope with market risks.Only the large shareholders with family members will increase the total interest expenditure and the total deposit ratio,which indicates that the large family shareholders have limited deposit sources,and there is a high absorption and storage problem,and the interest expense is higher.In addition,the higher the shareholding ratio of large shareholders,the higher the interest expense of banks,the higher the risk investment.Conclusion three:the banks set up by Chinese folk capital are the private banks in the narrow sense,which are mainly faced with the risks of credit risk,bankruptcy risk,corporate governance risk,asset structure risk and related transaction.The shortcomings of regulation of China’s private banks include:there are no detailed laws and regulations in the supervision of private banks;the mechanism of ’living wills’ is not mature;the sources of funds and business qualifications are too limited;the targeted risk prevention and control measures are insufficient;the differential supervision needs to be implemented;the extension supervision of the shareholders is lacking;the supervision of the related transactions is weak;the withdrawal mechanism is not mature and so on.Based on the empirical analysis and the reality of supervision of private banks in China,the paper constructs the ’Twelve sub item supervision model of private banks in China’ and ’China private bank supervision and CAMELS target enantiomer model’.The innovations of this paper are mainly embodied in:(1)The paper makes analysis on the base of combining bank operation with bank risk and CAMELS index.The bank supervision,the identity of the large shareholders,the bank risk and the CAMELS index are analyzed in a creative way.Few scholars in the past have studied the impact of bank regulation and major shareholder attributes on bank risk and bank CAMELS index.(2)The paper makes expansion and innovation of regulatory data and other indicators.The bank supervision data add the world bank’s 2012 bank supervision questionnaire to the empirical analysis to expand the data and cover the changes in banking supervision after the financial crisis.The regulatory indicators are divided into 12 categories according to the World Bank’s standards,and the indicators are more comprehensive.In banking risk,most scholars in the past choose one or two kinds of risks to analyze.This paper selects three different kinds of risks to conduct comparative analysis.(3)Through comparing with the experience of foreign bank supervision,the paper analyzes the supervision of private banks in our country.Basing on the results of empirical analysis,and combining with the supervision of private banks in our country,the paper constructs the ’twelve sub item supervision model of private banks in China’ and ’China Private bank supervision and CAMELS enantiomer model’.