The Research On Self-discipline Effect Of China's Listed Banks' Charter Value Against Risk

Banks'Charter value is a right of value to obtain future rental income which is given by the Properties and functions of banks for a Special industry.It is the rent caused by the Incomplete Contracts between banks and market transactions , as well as banks and their regulators.Research literature at home and abroad have proved that charter value gives banks the ability of continued running and it can reduce the risk of moral hazard by increasing the cost of bank failures.So we have the conclusion that charter value has the effect of self-discipline.But because of the protection of national security network and weak government regulation,banks will engage in high-risk business activities at the risk of bankruptcy.So this impair the effect of self-discpline. With the opening up China's banking industry in recent years, foreign banks continue to enter our country.That will reduce the banks'charter value more over. Therefore, it has a great importance of researching the self-regulation effect of banking franchise value.At first,this paper explains the meaning of charter value, and analyses the the formation of the source and the forming principle.Then it explains the meaning of self-discipline of banks from an economic perspective and proves the existence of self-discpline effect of charter value.And through the analysis of the role of self-regulation effect,we conclude that charter value can restrict the moral hazard of banks.And it analyses the impact of the factors which compose the calculated charter value,and finds that exogenous factors of the charter value will fall off with the opening of the finance market.Enhancing internal efficiency of banks is the only way to increase bank charter value.On this basis,the paper constructs panel data model with annual data of the national listed banks from 1997-2008 and analyses the self-discipline effect of banks'charter value.We find that government regulation will increase risk-taking incentive of banks in the short term which weaken the self-discipline effect of charter value.After that,the paper explains the reason why self-discipline effect of charter value is weakened with the angle of financial system and the development of the banking industry.In the end ,this paper makes some policy recommendations of protecting the charter value and self-discpline effect.