The Analysis Of Moral Hazard Of China's State-owned Commercial Banks

As the institutional guarantee of ensuring client to withdraw investment income, the core role of the corporate governance is that it can curb the moral hazard of agent on the basis of incentive agent effectively. The moral hazard of state-owned commercial banks is mainly manifested the opportunism behaviors of pursuing of short-term interest through expanding credit scale regardless of the accumulation of long-term risk. State-owned commercial banks has accomplished stock system reform and listed smoothly, established relative perfect formal corporate governance. However, perfect formal corporate governance is not the sufficient conditions of ensuring the effective operation of corporate governance. In addition to the perfect formal corporate governance, corporate governance running effectively need a series of internal and external conditions.In case of countries still hold financial control, both local government and state-owned commercial banks have phenomena of soft budget constraint. China issued four trillion investment plans in response to the impact of the sub-prime mortgage crisis on the domestic economy. Because the financial and power does not distribution balance between central and local governments, local governments established local financing platform and change the community investment into bank credit, The credit of state-owned commercial banks for local financing platform have abundant bad loans. Based on the problems of the credit of state-owned commercial banks for local financing platform, the paper analysis reasons of the moral hazard of state-owned commercial banks which have the performance of pursuing short-term interests by expanding the size of credit and ignoring the long-term risk accumulated. This paper argues that causes have internal and external factors: external factors are soft budget constraint, local government investment and financing and the level of deposit-loan spread. Internal factors are salary system, risk management and the board of supervisors. External factors provide a condition for the moral hazard of state-owned commercial banks and determine the performance of the moral hazard of state-owned commercial banks which is the form of expanding credit scale; Internal factors is the decisive factor of moral hazard of State-owned commercial banks, it is the inefficient of the corporate governance of state-owned commercial banks that makes the moral hazard of state-owned commercial banks realized finally. Finally, according to the internal and external factors which caused the moral hazard of state-owned commercial banks, the paper put forward policy suggestions.