The Research On City Commercial Banks Intervened By Local Government

Since the 1990s, along with the deepening of China's gradual pace of reform, China's banking system has begun to change. Urban commercial banks undoubtedly is the most eye-catching and active components in the entire system."Decentralization"and"Giving up the interest"thinking reinforces the incentives of local government finance and economic since the Third Plenary Session of the 11th Central Committee. Then, the local government's independent status has been clarified. So, they will actively support the development of local economy by controlling of resources to achieve its political aims. Caused by China's fiscal revenues declined, the municipal bond failures, the reform of stated-owned banks and other features, the local government decided to strengthen intervention city commercial banks had its inevitability. Based on the pessimistic "political" perspective, using the rank-ordered tournaments model to explain the level of intervention is affected by cost and earnings, loss of reputation, the utility of elevation, financial strength of local government and other factors such as the ability of channeling funds; The performance of China's urban commercial banks is clearly impacted by the local government's fiscal strength and the loans of state-owned commercial banks, corroborating the local governments have the impulse of strengthening the control while other sources of financing have been blocked. Those who wish to come to establish city commercial banks into modern financial enterprises with a real sense, the interests of local government reform are the key problem. Finally, it discusses policy recommendations should be from outside to inside in the transition period to establish positive interactions between the local government and urban commercial banks.