Comparison And Research On Senior Management's Compensation Incentives Mechanism In Commercial Banks

Since the 2008 financial crisis's outbreak, the high compensation of the executives in financial industry has been paid for increasing attentions. Indeed, it is questioned by growing crowd of people. Whether banking executives'exorbitant compensation can be regarded as the moral risk, which brings the tremendous risks to the executives. There's an imperative require for certain kinds of executives' compensation-incentives mechanism, through which banks can achieve the benefits and risks optimum equilibrium. It is also an unavoidable problem for banking and financial supervisions to establish incentive institutions, in order to minimize transaction costs between the managers and owners.Since 1979, our commercial banking system has experienced three times of reform. Currently, our commercial banks have improved significantly in the global financial industry. Moreover, it gets an obvious profitability of the asset scale and gradually narrows the gap between Chinese commercial banks and the world famous banks. Nevertheless, commercial banks in our country is still wanting in comprehensive management ability, and it lacks the internal ability to resist risks. Banks'employees especially executives'compensation-incentives'mechanism still never arrive at a consummate point to solve.From the view of the world economy, this thesis combines the research method of the normative analysis and empirical analysis. Firstly, it introduces the research background for some significance concepts which relates to the research framework. Secondly, it reviews the commercial banking executives'compensation-incentives mechanism, involving the basic theory and classic hypothesis, and summarizes the current situations and insufficient of existing research by foreign and domestic scholars, which in order to lay foundations for this thesis. From the view of the world economy, this thesis divides the developed banking systems into two models of "Anglo-American model" and "Franco-German model", analyzing the current situations of the respective characteristics and limitations. At the same time, through collecting the last five years'annual reports of Standard Chartered Bank to see the executives'compensation, net assets income rate and related data, the thesis analyzes and forecasts the structure of compensation, compensation policy and specific income, which is in contrast with the commercial banks in our country to seek differences. Then from the structure of compensation and compensation levels in two aspects, this thesis analyzes the current situations of 14 commercial banks in china, which are listed, in executives'compensation system and the current stage of the insufficiency and the challenges.Chapter 5 is the empirical analysis part, by collecting data group of 2005--2010 from listed commercial bank executives'compensation, to present seven influencing factors, and build the multiple regression model for empirical test. It finally finds that net assets income rate, capital adequacy ratio, total assets and share ratio of the largest shareholder, have significant correlations. After detennining the relationship between the compensation and performance, using the corrected model with cross variables to analyze the executives'compensation, which is the influencing factors of performance's sensitivity, which is one of the innovation points in this thesis. Through the empirical test, this thesis finds that capital adequacy ratio and total assets have a negative correlation. That means, the higher the adequacy, and the bigger the total assets, the sensitivity between the compensation and performance will also be smaller. Finally, according to the current situations of our banking executives'compensation, developed countries banking executives'compensation-incentives'mechanism and empirical analysis'conclusion, it can draw the conclusion that we should carry out further for commercial banks'executives'compensation-incentives'mechanism.