Equity Structure And Performance Of Commercial Bank

Under the current situation, China is a developing country, its financial sector is the major source of funds for the country's economic development; and among all the financing channels, commercial banks enjoy the absolute advantage. In the world of rapid economic development, financial internationalization is progressing gradually. Meanwhile, China is strengthening the reform of financial system and has been open in an all-round way. China's banking industry is confronted with two huge challenges: one from the more and more fierce domestic competition, and the other from many foreign banks entering China. Without effective promotion of the overall competitiveness of China's commercial banks, it will be hard for them to operate smoothly. They will even face serious frustrations that are unfavorable for financial stability and block economic development. Therefore, it is significant to analyze and evaluate the current performance of China's commercial banks in a comprehensive and objective manner, and detect the problems existing in their operation, so as to put forward scientific and reasonable strategies to promote their performance and ultimately get a firm status in the fierce competition. Nowadays, the Chinese banks are either carrying put or deepening reforms, and the capital marketing is expanding, which determine the significance of exploring the relationship between the shareholding structure and operational performance of commercial banks.The shareholding structure determines a corporation's internal governance. For instance, the board structure, shareholding stimulation for managers, etc. determine the corporation's distribution of internal rights, which then affect the corporation's performance. Besides, some external governance measures, such as the control right market, depend on its shareholding structure as well. Here is the conclusion:the shareholding structure influences performance through the intermediate of governance mechanism. Only a reasonable shareholding structure will generate a perfect governance mechanism, which will then help realize an effective operation, and further ensure a good performance. Consequently, the study of the relationship between shareholding structure and corporate performance has great theoretic and practical significance.For a country's economic development and financial stability, the establishment and development of commercial banks play important roles. As a developing country, China's capital of economic mainly comes from domestic financial sectors. The commercial banks have an absolute advantage over all other financing channels. Therefore, the operating performances of commercial banks on the one hand, at the micro, have great impacts on the normal operations of the banking systems and the core competitiveness of the companies, and on the other hand, at the macro, have great impacts on the ability to optimize the allocation of economic resources and ensuring the improvement of economic growth. After years of sustainable development, the scale of China's commercial banks are getting bigger, and will continue to grow and develop, commercial bank has occupied a crucial position of national economy in China. However, currently China is still in the stage of reforming the economic development style. Although we have change from the previous planned economy to the market economy, compared to banks in mature market countries, China's commercial banks lack of the sense of competition for various reasons. The business performances are still low and there is still a long way to go for China's commercial banks. The inherent requirements of continuous development of China's commercial banks determine that the banks have to greatly improve performances. As China's capital market started late and the developments could be improved, we still have to raise most funds to be used for economic activities through the banking sector. Therefore, the primary task of financial reform is to make the normal development of the banking system reliably protected to benefit China's economic development. Ccommercial banks' ownership structure is the basis for the smooth operation of commercial banks, and to a large extent, the equity structure of commercial banks is directly related to the effectiveness of long-term development and the level of performance of commercial banks.Whether using equity method of reform will be able to guarantee the improvement of commercial banks' business performance? What on earth are the relationships between reform of the equity and corporations' performances? How does ownership structure affect corporations' performances? What kind of ownership structure is reasonable? How to build the reasonable equity structure of commercial banks? From the relationship between the company's ownership structure and business performance and combining the special nature of commercial banks, this paper analyses the shareholding structures of Chinese and foreign commercial banks and looks for the inadequacies of existing structures. It figures out that optimizing the equity nature improves internal corporate governance mechanisms and optimizing ownership concentration improves the external mechanisms of corporate governance, only by that can Chinese commercial banks construct the property basis for scientific, reasonable and effective corporate governance.