Research On The Relationship Between Related Lending And Bank Performance Of City Commercial Bank

Currently the joint-stock market reform of city commercial banks is ongoing. City commercial banks through the introduction of domestic private capital and foreign strategic investors, etc. to gradually reduce the stake of local governments to realize the diversification of ownership structure. Some of them to promote their reform even with capital markets. However, due to the heavy historical burden, the city commercial bank's marketing process is slowly, corporate governance issues are still serious. Although the initial realization of city commercial banks diversified ownership structure, but the controlling position of the local government has not changed. In local government "dominance" of the ownership structure, the board of supervisors is also difficult to play a role in its governance, the internal corporate governance mechanism of city commercial banks is distorted. At the same time the related lending is always accused in the development process of city commercial banks.2009 Beijing Bank provide loan guarantees which values 10 billion to Hua yuan real estate that is its shareholders, the pledge has shrunk 4.7 billion because of falling of share price. At the same time Hua yuan Real Estate's cash flow property is negative. Qilu Bank in 2010, " fraudulent loan" event also broke its associated non-performing loans to total loans accounted for 63% of non-performing loans. Associated with increased lending exposure of city commercial banks, city commercial banks as a major development process "criticism." Related loans by commercial banks and city relationship between performance, on the one hand to enrich the domestic research on the related loans, the other hand, we guard against the risk of city commercial banks also have strong practical significance.In the process of research on the relationship between related lending and bank performance of city commercial bank, author used standardized research methods and empirical research methods. First, principal-agent theory as the theoretical basis, focusing on the special nature of commercial banks, corporate governance, discussion of commercial bank loans to corporate governance and the associated relationship. Secondly, to set up more than three years and the study of city commercial banks, city commercial banks by 64 sample points on the 157 city commercial banks associated with loans and the relationship between the performance of an empirical study to analyze the association loans non-performing loan ratio of banks and net capital gains rate.This article is divided into four parts. The first chapter is an introduction, describes the background, significance of the topic and research methods, and research related loans reviewed the literature at home and abroad; second chapter introduces the definition of related loans, commercial banks, the special corporate governance and the corporate governance of commercial banks loans to the relationship between the associated analysis; the third chapter is the empirical part of corporate governance in commercial banks based on the special nature of the linear model was constructed using the 64 city commercial banks in China report data, analysis loan and the association between bank performance. Chapter IV the main conclusions of this paper and policy recommendations. In the third chapter of the empirical evidence on the basis of the results were summarized, with a corresponding policy recommendations, and summarizes the innovation of this paper, less than and further research.This paper focuses on the special nature of commercial banks, corporate governance, corporate governance of commercial banks lending relationship with the association and the commercial banks associated with loans to corporate governance and the relationship between the analysis, that the related loans are corporate governance issues, the external market governance in commercial banks mechanism is not the case, the governance of related loans depends on the internal governance mechanisms and government regulation. Without good internal governance mechanisms and appropriate government regulation, association within the bank loans will become a tool of bank assets were transferred, the performance of the "tunnel effect" or "looting view", which have a negative impact on bank performance. I take advantage of our 64 city banks are 157 samples, loans and city commercial banks associated with the relationship between performance of the empirical. The results showed that the proportion of loans associated with the non-performing loan ratio was significantly correlated with return on equity significantly negative. China's city commercial banks indicate generally lower standards of corporate governance, the case of loans associated with them to overcome the information asymmetry can not play, the function of reducing transaction costs, but the performance of the "tunnel effect." The same time I also city commercial banks associated with loans to corporate governance checks and balances on the effect of further analysis carried out found that ownership concentration over who will lead the association within the bank lending behavior, but the ownership structure of competition can be constrained lending practices associated with controlling shareholder; City Bank of China's urban local governments "due to the dominance" of the ownership structure is likely to cause the absence of owners, led to internal control issues; bank board size and large size of the board of supervisors will increase between supervisors and between the directors coordination costs, leading to slow decision-making, but also bring about free-riding behavior of directors and supervisors; to maintain the independence of the Board and the Supervisory Board can really enhance the level of corporate governance of banks, to prevent bank insiders the predatory behavior of outsiders; Chairman and President of Board of Directors of two level-one weakened the independence of the board makes the checks and balances on the management level is not functioning well; incentives in executive pay, the executives holding stock options or incentive system to reduce management moral hazard and reduce management agency costs. Therefore, in order to prevent the city commercial bank loans associated with the "tunnel effect", we must reform the irrational city commercial banks ownership structure and strengthen information disclosure related loans and strengthening government supervision.Creative process in the paper, the author attempts to achieve two aspects of innovation. First, the topic is novel. Currently specializing in loans to China's city commercial banks associated with the literature is also rare, so from the perspective of topics, more novel topics; second novel research methods. The lack of data in our existing bank loans associated with the research literature, more of a theoretical discussion and case studies, and the lack of empirical support. And this from a corporate governance point of view of the special commercial banks associated corporate governance mechanisms and the relationship between loans and, through an empirical model to set up three years and over 106 city commercial banks to study, organize the city commercial bank websites The annual public disclosure statements, collected in 2005-2010 sample of 157 valid data on loans and city commercial banks associated with the relationship between performance of an empirical study.As the author limited theoretical knowledge as well as other conditions, this research there are still many deficiencies. First, the performance of related loans and Bank of the relationship between the empirical, this paper attempts only a linear regression model, without taking into account the nonlinear relationship between the two; Second, the incomplete disclosure of bank information and Many nonpublic information, I can not get loans on city commercial banks associated with all the relevant information, such as interest rates associated with loans, bad debt associated with the loan rate, which makes empirical research can not fully reflect the city commercial banks associated with the loan level of quality.city commercial bank,corporate governance,bank performance.