Study On The Improvement Of Management Performance For State-owned Commercial Banks

Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank are state-owned commercial banks of our country. They are the main body of our country's financial industry and the lifelines of national economy. In the reform and the development processes of more than 20 years, the state-owned commercial banks asset increase by several times and contribute to the economic development and living standard of the people. But people have to worry about the poor management performance of the banks. This kind of problem affects the current GDP growth of economic ages, making it impossible to fulfill the expectations of economic growth through financial deepening. On the other hand, it is difficult to deal with the huge impact of renmibi business of foreign banks. Therefore, we should analysis the inside system reason of this performance. It is meaningful to the ongoing reform of commercial banks. This paper studies the cause of the poor performance of state-owned commercial banks from enterprise incentive system and property structure, based on the multitask principal-agent model, and finally put forward some suggestion of the state-owned commercial banks reform. Part One Introduction of State-owned Commercial Banks Management The state-owned commercial banks manage poorly over a long period of time. There is a gap between them and foreign banks. And the part management indexes of some infant joint-stock banks gain an advantage over them. The weak competition ability of state-owned commercial banks lies in the evasion of deep system revolution in the financial reform. It is hardly to succeed in the reform if we don't go forward to the basic change from the system, only depending on technology imitation. Part Two Principal-agent Theory and Multitask Principal-agent Model The main parts of principal-agent theory are how should the principal contract and incentive the agent to maximize the utility under the condition of information dissymmetry. Through the development of more than 30 years, it is applied in many fields of economics. At the same time, multitask principal-agent model is developed in the methods. The hypothesis of the new model is more realistic and the ability of interpretation is better, so it can be applied to analyze some aspects about the enterprise government of our country. This paper studied the incentive mechanism and its influence to the performance, based on the multitask principal-agent model. Furthermore, it extends the model and analyze the necessity of property system's reform. Part Three The Chief Distinction of Principal-agent Relations for State-owned Commercial Banks of Our Country The government, as the principal in the principal-agent relation, wants to maximize proprietor rights of commercial banks. On the other hand, it also pursues the target of social welfare maximum, especially society stability, economic growth and smooth propulsion of reform. Therefore, the state-owned commercial banks are influenced to undertake dual function of finance support and profit maximum. The agents of the state-owned commercial banks face two tasks, namely, the policy task and business task. The principal still adopt the way of administration appointment after the investigation and choice of the Organization Department. This kind of way disobeys with the call of financial business enterprise. The state-owned commercial banks can hardly select the real banker to be the agent, and it is difficult to carry out the separation of the government and the banks. The government, as the principal, can't evaluate and examine the performance of the agents and doesn't establish a valid evaluation mechanism of the banks. The standard of performance evaluation is too fuzzyunder the system to punish or incentive the agents reasonably. The ongoing reform provides short incentive effectively to the managers of the state-owned commercial banks, but the lack of the long period incentive method results in the short behavior of the agents. At the present the administration incentive still predominates in the incentive system of the banks. Part Four An Analysis of State-owned Commercial Banks Based On the Multitask Principal-agent Model Under the condition of particular assumption, the model is set up as: max TCE = B ( a1 , a2 ) ? 12 ρβT∑β? C ( a1 , a2) s. t. ( a1 , a2 ) ∈arg max βTμ( a1 , a2 ) ? C ( a1 , a2) The maximizing condition of the above issue can be donated: β= ( I + ρ?? Ci j?? ∑)?1 B' The standard of management performance evaluation for the managers is fuzzy, and it is hard to observe the behavior of the managers, that is, business task cannot be measured. So the unique information is: x = x1 = a1 + ε, namely, σ22= ∞, σ12= 0. Therefore, if a 0, the following condition must be satisfied: 1 1 2 2 12 2221 11 12 22/1 ( / )B B C Cβ= + ρσ?C ? C C To analyze the cause of poor management performance based on the above model. It is concluded that the unique way to encourage the agents to concentrate on the management performance is weaken the incentive to policy task. The incentive to the policy task is the main reason for the poor...