During The Transition Period Of State-owned Commercial Bank Cost Management Mechanism To Explore

The introduction part delineates the purpose of this paper. TheChinese economy is undergoing a significant change from demandeconomy to socialism market economy. In this process, the stateowned commercial banks have begun to transfer themselves intoindependent legal entities from government dependent enterprises.This reform has necessarily been put under spotlight as it is vital forChinese economy reform. Both finance liberation and globalizationare greatly effecting the Chinese banking industry. The entrance toWTO will let foreign banks with advance institute and mixoperations compete in apparent advantage with home banks. How dothe Chinese banks furnished with traditional monopoly andprotection from government promote their competition so as to adaptthemselves into a competitive environment? The answer can be foundin cost management mechanism which serves as an effective tool topromote efficiency. In doing so, we must study the managementbehavior of state owned commercial banks, try to phase out efficientway to establish the cost management mechanism of state ownedcommercial banks, and thus pave a way out of the competition amonginternational commercial banks.This paper is divided into three chapters to study the costmanagement mechanism of state ownedcommercial banks.The first chapter studies the efficiency of state ownedcommercial banks in the positive way concerning with scaleefficiency, market structure efficiency and management efficiency,tries to reveal the factors contributing to low efficiency and weak costmanagement and further sums up problems underlying costmanagement of state owned commercial banks. The problems mainlyarise from aspects: the one is, in the vision of managementmechanism, inferior cost constraint mechanism and absence ofincentive mechanism; another is, as far as the property rightconcerned, unclear definition of the state owned commercial banks'property right. This may lead to "insider control" at price of realproperty owners. The author applies the Principal-Agent modal andtheory of asymmetry information in Economics to the study, analyzesthe reason for insider control In state owned commercial banks.Insider Control is result of absence of the institute on Property Rightand the fundamental reason for the inefficient management andoperation of the state owned commercial banks. To seek remedy, themodern enterprise institutes must be introduced to furnish the stateown commercial banks with stockholder mechanism. This chaptertries to shed light on the present status of cost management of thestate owned comnuercial banks, analyzes in depth the malpractice ofthe management and its causes and concludes that you can find noremedy if the present institutes on Property Right remain unchanged.The second chapter comes up with three basic problems facingthe cost management of state owned commercial banks during transitperiod. The first concerns with the function of cost. Quantitive studyand normative delineation are brought In the study of the functionsof the cost management of commercial banks with emphasis onimportant role of cost in commercial bank management. The secondproblem concerns with cost outlet items whlch are classifiedaccording to business operation process, cost behaviors and timesequence of cost items and then projects of cost management comesup. The third one Is about the connotation of modern commercialbanks. The low market level of state owned commercial banks,separation of banking operation which will maintain for long period,entrance to WTO, commercialization of the state owned commercial2bank in fast pace, evolving to mix banking operation step by step andthe particular features occurred in cost management of the stattowned commercial banks during the transit period-more traditionalcommercial bank business and less modern...