The Research On The Influence Of Capital-Constraints On The Corporate Performance Of The City-Commercial Banks In China

Since the promulgation of Basel I,the capital supervision of commercial banks has always been a matter of great concern to the financial academia and the banking industry.After the American financial crisis in 2007,the capital supervision of commercial banks by international banking supervision has been continuously upgraded and strengthened.The supervision of the Chinese banking industry has been keeping pace with the international banking supervision.The “Measures for the Administration of Capital Adequacy Ratios of Commercial Banks” issued by the Chinese Banking Regulatory Authority in 2004 marked that China's banking industry had entered a period of “hard restraint”.Capital supervision of the banking industry has been further strengthened.On the other hand,with the rapid development of China's economy in recent years,the asset scale of the banking industry has grown rapidly.At the same time,the asset scale of city commercial banks has grown significantly faster than state-owned banks and joint-stock banks.However,city commercial banks are obviously weaker than large and medium-sized banks in terms of capital replenishment channels,and the pressure problem caused by capital constraints has become more prominent and has an impact on the operation of city commercial banks.In the context of China's deepening of financial system reforms,strengthening of financial services to the real economy,improving the financial supervision system,and holding the bottom line of systemic financial risks,research on the impact of capital constraints on the operating performance of city commercial banks has a sound theory and reality significance.This article first combs the domestic and foreign literature based on the impact of capital constraints on commercial banks.Mainly the analysis of the motivation of capital constraints,the impact of capital constraints on the safety,liquidity,and profitability of commercial banks,the impact of asset securitization on the operating performance of commercial banks,and the impact of corporate governance on the operating performance of commercial banks.The literature is sorted out and analyzed,and combined with the existing literature,the research problems of this article are explained.Existing studies have shown that the impact of capital constraints on the operating performance of commercial banks objectively exists,and existing studies have not reached a consensus on this issue due to different bank samples,different periods,and different methods.Existing studies have not done in-depth research on the problem of group capital constraints of Chinese city commercial banks.In addition,capital constraints may also be interfered by the effects of commercial banks' asset securitization and corporate governance mechanisms,thereby changing their impact on the bank's operating performance.In terms of theoretical analysis,this article analyzes the internal transmission mechanism of capital constraints affecting the operating performance of city commercial banks in combination with domestic and foreign capital regulatory theories;then it analyzes the capital constraints under the influence of asset securitization,and the interaction between asset securitization and capital constraints,and the cause and mechanism of the influence of the mechanism on the operating performance of city commercial banks as well;finally,the conduction mechanism of the influence of the corporate governance mechanism on the relationship between capital constraints and the operating performance of city commercial banks is analyzed.In terms of empirical testing,this paper manually collected the 2009—2018 annual operating data of 92 Chinese city commercial banks and used this as a research sample.Through the evaluation of the operating performance of city commercial banks based on the three principles of bank operation,such as safety,liquidity and profitability,and the pressure of capital constraints faced by city commercial banks is measured from both qualitative and quantitative aspects.Then,a two-way fixed effect model and a dynamic panel GMM estimation model are constructed to empirically test the impact of capital constraints on the operating performance of city commercial banks.Then,it analyzes the heterogeneity of capital constraints affecting the operating performance of city commercial banks in four aspects: asset scale,innovation capability,listing status,and local economic development of city commercial banks.Then,the asset securitization and the interaction mechanism between capital constraints and asset securitization are included in the analysis framework,and the impact of capital constraints on operating performance before and after asset securitization is compared and analyzed.It also examines the moderating effect of asset securitization.Considering that the corporate governance mechanism will determine the effectiveness of capital supervision,this paper further incorporates the equity structure and internal governance mechanism into the analysis framework,and analyzes whether the corporate governance mechanism and capital constraints affect the operating performance of city commercial banks as alternatives or mutual adjustments.The research results of this article show that capital constraints have a significant impact on the operating performance of Chinese city commercial banks.Specifically,when city commercial banks face greater capital replenishment pressure,they will have an adverse impact on bank safety,liquidity,and profitability.The study also found that when city commercial banks face pressure of punishment,they will focus more on improving the liquidity of the bank,while facing capital warning and punishment pressure,bank profitability will decline.The impact of capital constraints on the operating performance of city commercial banks will be different due to the different characteristics of the bank's heterogeneity.The intermediary effect test procedure shows that capital constraints affect the overall operating risk and credit risk of city commercial banks through operating efficiency and earnings management,respectively,and affect bank liquidity through credit asset allocation ratio and term management.Through provisioning level and operating efficiency,it affects banks' s profitability.Considering the influence of asset securitization,the impact of capital constraints on the operating performance of city commercial banks has changed,and asset securitization has a significant moderating effect on the relationship between capital constraints and bank operating performance.After incorporating the corporate governance mechanism into the analysis framework,the interaction between the corporate governance mechanism and capital constraints has a positive effect on the improvement of city commercial banks' operating performance,and this paper also finds that both the internal governance mechanism and the equity structure of the bank are both positive.The main innovations of this article are:Firstly,from the multi-dimensional evaluation,we study the impact of capital constraints of city commercial banks on operating performance.In the past,with regard to the research on the impact of capital constraints on commercial banks,due to the availability of data,most of the literature used large and medium-sized banks or a mixture of various types of commercial banks as samples to conduct research.As the core group of banks in addition to large state-owned banks and national joint-stock commercial banks,China City Commercial Bank has different group characteristics,and it is the focus of preventing small and medium-sized banks from operating risks.This paper evaluates the business performance of commercial banks based on the “three characteristics” principle of commercial banks,constructs capital constraint indicators from quantitative and qualitative dimensions,and conducts an in-depth study on the capital constraints of city commercial banks,and tests capital through the intermediary effect test procedure.The transmission mechanism that restricts the influence of operating performance has enriched the current research content on capital constraints of city commercial banks.Second,the introduction of asset securitization into capital constraints affects the research on the operating performance of city commercial banks.Most of the existing studies directly analyze the impact of asset securitization on the operating performance of commercial banks.However,the development of asset securitization is a financing behavior that commercial banks do not include in liabilities.The degree of participation in asset securitization will affect capital constraints and bank operations performance as well.As a result,this article establishes a research model of the interaction between capital restraint mechanism and bank financing affecting the operating performance of city commercial banks,and reveals the impact mechanism of the interaction between asset securitization and capital restraint on bank operating performance.Eventually,This paper incorporate the corporate governance mechanism into the analytical framework that capital constraints affect bank performance.Obviously,capital constraints belong to the external mechanism of commercial banks,while the corporate governance mechanism belongs to the internal governance mechanism.This paper focuses on the shortcomings of the corporate governance mechanism of city commercial banks,and through the establishment of a research model of external mechanisms used in internal mechanisms to affect the bank's operating performance,it analyzes the impact of capital constraints and corporate governance mechanisms on the operating performance of city commercial banks in a more systematic manner.