Study On The CEO Incentive And Restrictive Mechanism Of China State-Holding Banks

From the viewpoint of controlling risk, the article studied the linearity incentive contract, which comes from the Principal-Agent Theory. It found the CEOs under the contracts carry only limited liability, which probably leads CEOs make bank carrying more risk than normal. Therefore, the key points of the article is, how to build the CEOs incentive and restriction mechanism in State-holding Banks, and ensure to incent CEOs to work hard, restrict the limited liability of CEOs to low down the risk as well.Firstly, the article studied the CEOs incentive mechanism actuality of state-holding banks (be called state-owned before reformation) and the limitation of using linearity incentive contract. The article studied the CEOs incentive mechanism in different phases of reformation, and pointed out the state-owned banks were actually using the linearity incentive contracts. What's more, using a mathematic model from Christian Gollier, the article validated the existence of the limitation of linearity incentive contract.Secondly, the article studied the CEOs incentive and restriction mechanism in American and Japan banking. Through the research of all-sided CEOs incentive and restriction mechanism, the article summarizes the characters of the mechanisms, the success and the failure experiences, and came to knew that we must strengthen the long-term incentives, make the CEOs duties and powers equality and make the incentive and restriction mechanism correspond to outside environment.Third, through the above discussion, the article got the suggestions for improving the CEOs incentive and restriction mechanism in state-holding banks. The article put forward a series of indexes for annual performance evaluating and new long-term incentive mechanism; also, it brings forward three countermeasures to restrict the CEOs'limited liability: regulating the governance, strengthening the outside supervision in order to cover the market limitation, and building the mechanism for risk-liability-punishment.In brief, the article studied the incentive theories and the experiences of CEOs incentive mechanism in American and Japan banking, and did some attempting and put forward some innovative ideas on the CEOs incentive and restriction mechanism of state-holding banks.