A Study On The Impact Of Corporate Governance Of Commercial Banks On Bank Credit Risk

At present, China is in a period of financial innovation and its potential risks,this time have a great opportunity, also produced a number of potential hazards at the same time. It is well known that United States subprime mortgage broken out in 2008, the main reason is the subprime borrower failed to make repayments and caused widespread panic through the world. The frequently bank crisis make people realize the power and influence of the credit risk, and also the vulnerabilities in the banking system.Despite the international financial crisis has not caused fatal injuries in China,banking governance structure and regulatory issues are worth notice. The academic community is currently focused on the link between the Banking governance structure and its performance, however, the study on the relationship between corporate governance structure and risk is rare in China, in particular the relationship between governance structure and effect of credit risk. In recent years, research focused on technical aspects in terms of credit risk, in credit risk evaluation and measurement have considerable progress. However, especially in the study of relationship between credit risk and governance structure of commercial banks, there is only some brief analysis of literature and no comprehensive and systematic demonstration. Therefore, from the perspective of management, researching on how to effectively manage credit risk has a profound significance for a long-term and steady development.This article summarizes the current literature of credit risk management and governance structure in this article, and analyzes the status of bank credit risk, then respectively analyzes effects in credit risk management of the Bank’s governance structure of four levels, that is shareholders, board of directors, board of supervisors, as well as the incentive system.Secondly, this research based on theoretical analysis of proposing the research hypotheses; Chooses the NPL ratio as variable being explained, and chooses the corresponding indicators from the four levels as explanatory variables, first studies risk-management committees, which as an important element, introduces the number of the board supervisors meeting and risk-management committees meeting, puts the assets,debt to assets ratio and net interest spread as control variables to study, then, uses regression model which Based on balanced panel data.Thirdly, the article selects 13 listed banks’ annual data of 2007-2014, followed by a description of the sample bank of the statistical analysis, and uses the method of empirical analysis to discuss effects in credit risk management of the bank’s governance structure. Conclusion is as follows: for the shareholders, ownership concentration is significantly negative correlation with the credit risk, the state-owned shares is positive correlation with the risk; In terms of the board of directors, the number of the board and the proportion of independent directors are significantly negative correlation with credit risk, the number of the risk-management committees is significantly positive related to credit risk, the relationship between the number of risk-management committees meeting and the credit risk is not obvious; In terms of board of supervisors, the number of this department is significantly negative related to the risk, the relationship between the number of the board supervisors meeting and the credit risk is not significant; In the aspect of incentive system, management shareholding is significantly positive related to credit risk, the relationship between this risk and executive pay levels is not obvious.Finally, according to the conclusions, proposing advises to improve bank management and enhance the ability to prevent credit risk.