Research In Corporate Governance Of Chinese Listing Banks-Based On The Specificities Of Bank Industry

Most of formal researches in bank corporate governance were just simple applications of traditional and classical corporate governance theories, and were far away from the basic characteristics of banks. For this reason, this paper was about to illustrate the specificity of governance goals, governance environment, governance mechanisms in banks, and wished to contribute to bank corporate governance researches.Banks are finance institutions with high asset-liability ratio, scattered debts, and heavy externalities, which affected their governance fundamentally. Because of their importance and externalities, banks'performances are not related with there shareholders and creditors, but also with other stakeholders such as corporations they loaned to and community residents. Based on this, bank corporate governance should take ensuring the benefits of all stakeholders as first goal.When talking about governance environment, firstly, banks are strictly supervised: Threshold of banks are usually higher than normal companies; the operation of banks are strictly supervised; the supervision of banks are much more complicated than that in other industries; banks usually are supervised by more supervision institutions.Secondly, the principal-agent problem in banks is more complicated than that in other companies. Thirdly, bank corporate governance is usually negatively affected by savings insurance.Due to governance environment like this, most effective governance mechanisms lose became less effective. The empirical evidence in this paper strongly supported arguments given above. Through the empirical analysis with governance data of 14 Chinese listing banks from 2003-2008, and the comparison to SSE 50 index companies in the same period, this paper found that most normal governance mechanisms, except board governance, are not significantly related with bank performances. This finding showed the great importance of board governance to bank corporate governances. Moreover, the empirical analysis results showed the significant positive relations between the percentage of independent directors, board meeting frequency and bank performances, and the significant negative relations between board size, terms of independent directors and listing banks performances. Again, all these illustrated that the independence of board of directors is the most important mechanisms in bank corporate governance.