China's Commercial Banks' Capital Structure And Operating Performance Study

We have opened our financial market to the world in the end of 2006. This means that our commercial banks would face up more competitors from all over the world. So it is important for our commercial banks to learn how to survive and develop in the more competitive market. The business performance can reflect asset management capabilities, profitability, capacity utilization of capital and other competitiveness, if our commercial banks want to be in a dominant position in the fierce competition, it is essential to enhance the business performance. Therefore, the main purpose of this paper is to study that how the commercial banks' capital structure affects its business performance, and find out some solutions to improve the business performance for our commercial banks.In the first place, this paper introduces some basic theory related with the capital structure. Then, it summarizes and analyzes the corresponding theory on capital structure. The next part is written to redefine the meaning of the capital structure and business performance. Then it analyzes the commercial bank's capital structure and business performance in the current situation according to the new definition. In order to make well-founded conclusions, the paper selected relevant data of China's 11 commercial banks from 2004 to 2007 as samples. It used multiple linear regression models to analyze how the commercial banks' capital Structure affects its business performance. The statistical analysis software we used is SPSS. The conclusion could be drawn: The relative concentration of ownership structure will enhance the business performance for our commercial banks. The nature of the first major shareholders has no association with the business performance. The banks have un-obvious relationship between the proportion of subsidiary capital and the business performance. The banks have significant positive correlation between capital adequacy ratio and the business performance.According to the conclusions we have gotten, this paper made four recommendations from the perspective of optimizing capital structure to improve our commercial banks' business performance. Firstly, China's commercial banks should optimize the core capital structure. Secondly, they should increase the proportion of subsidiary capital and strengthen the risk awareness. Thirdly, they should strengthen the supervision of capital adequacy ratio. The last but not the least, they should make the capital market more complete.