Ownership Reform And Risk-taking Of State-owned Commercial Banks

As the core of financial areas, banks play a significant role in the development of economy. With the deepening of China's economic reform, the State-owned commercial banks' original contract arrangements got behind the overall pace of economic reform, such a system of non-equilibrium made them not only inefficient, but also contained the enormous financial risks, in violation of the principle of prudent operation of commercial banks, which seriously affected the efficiency of resource allocation and national economic and financial security, therefore, the transformation of State-owned commercial banks has been an important element of reform.Beginning in 2004, the reform of State-owned commercial banks has entered a substantive stage, so far nearly five years, how it affected the operational behavior of banks and whether it achieved the expected results are concerned by the academic community and the entire society. Many scholars emphasize that only set up a limited company can not be called to achieve the objectives of the reform, but we should determine whether the State-owned commercial banks enhance risk control and profitability after the reform of property rights.In this paper, the author concentrated in the differences in risk behavior before and after the property rights reform of State-owned commercial banks. In order to overcome the numerous factors that affect the banking operations, the author put the reform as a "natural experiment", set up "treatment group" and "control group", and found that the State-owned commercial banks had become relatively cautious after the reform, so the property reform had achieved the desired results.At the same time, the author theoretically explained the causes of such changes. The ownership reform of State-owned commercial banks had changed the risk behavior from the form of changes in property rights and corporate governance structure, which reduced the "Soft Budget Constraints", but also inhibit the risk of moral hazard at the micro level. At last, the author also put forward a specific policy recommendation.