A Research On The Financial Performance Of China's Commercial Banks From Stakeholder's Perspective

As the most important institution for financial intermediation services, commercial banks are the main body of the modern financial industry and its influence on economic activity ranks first in various types of banks and non-bank financial institutions. Its healthy and effective operation is an important prerequisite for the rapid development of a country's economy. The intensification of global economic integration brings about both limitless opportunities and more furious challenges. After joining WTO, Chinese financial market gradually opens up. With solid financial strength, prudent management, sophisticated technology and advanced management, foreign banks gradually expand market shares in domestic financial markets, a great challenge to China's commercial banks. Facing fierce competition, China's commercial banks are confronted with both development and survival issues. How to enhance its ability to withstand risks and to enhance their core competitiveness and profitability has become a widely concerned issue. Facing the financial crisis, how to improve its performance has become the key of the banking sector.Most existing literature studied the performance of commercial banks caused by market structure, bank efficiency and corporate governance. The subprime crisis causes worldwide doubts about the operation rationality of financial institutions. Facing the increasingly fierce competition and the financial turmoil, how to improve commercial banks'performance are particularly important. According to stakeholder theory (Freeman,1984; Blaire,1998), commercial banks, as special enterprises for funds operation, are interest groups composed by shareholders and creditors, employees, customers and the government. The quantity and quality of resources invested by stakeholders will directly affect commercial banks' financial performance. Satisfying their needs reasonably will make them to invest more specialized resources and bear more risks, which will constantly improve the financial performance of commercial banks and are conducive to commercial banks' long-term performance optimization. Few existing theories studied commercial banks' performance based on stakeholder theory while they didn't expound the theoretical mechanism that stakeholders influence commercial banks' performance. This hinders both theoretical research and its guidance in performance management practice of commercial banks.Incorporating stakeholder theory, contract theory, resource-dependence theory, value chain theory and expectation theory, this thesis first defines the stakeholders of commercial banks and analysis stakeholders'satisfaction-input relation, the relation between stakeholders'satisfaction and the cost of commercial banks and the relation between commercial banks'performance and stakeholders'satisfaction. The theoretical mechanism that stakeholders influence commercial banks'performance is illustrated clearly and stakeholders'satisfaction by commercial banks is the key that influences stakeholders'input and then the performance of commercial banks. Secondly, the article analyzes and the causal effect between stakeholders' satisfaction and commercial banks'performance by using panel data regression model, Granger causality test. Results show that their correlation is significant and that their causal effects are basically double-way, which fully demonstrates not only the correctness of the above theoretical analysis but also the necessity and the rationality of the research on commercial banks'performance from the perspective of stakeholders. Then this paper, according to the interests of different stakeholders, constructs a performance evaluation system of commercial banks. Practical suggestions for the performance evaluation of commercial banks are put forward finally.This research has certain innovations in the research perspective, research content and research methods. Also there are some deficiencies. It is a preliminary study about commercial bank's financial performance from the perspective of stakeholders. Due to the availability of sample data and research time constraints, the performance evaluation system constructed here is still at theory stage. How to take in commercial banks'risks and to evaluate their relationship with risks will be new for further research, which will give better play to stakeholder theory in guiding the performance management practice of commercial banks.