A Study Into The Relationship Between Bank Culture And Bank Performance Of Chinese Commercial Banks

Rapid development of the Japanese enterprises in the late twentieth century had attracted much attention in the US academic world. Researchers from the western countries wondered about the rising miracles created by Japanese enterprises, the studying of which lead to the appearance of corporate culture theory. With globalization and the fierce competition in the global market, corporate culture management as a new managing method is gaining more and more attention, which is nowadays seen as the key to build up core competitiveness of modern enterprises.Since December,2006 China government had removed all the restrictions of RMB transactions conducted by foreign banks, making it possible for foreign banks to enjoy the same rights in the market as the Chinese banks. Such change means tremendous and fiercer competition facing Chinese banks, as with the localization of foreign banks in the domestic market, there is possibility that the market shares which used to belong to Chinese banks would be taken over by foreign banks. How to maintain the leading positions in the market for Chinese banks is an issue requiring serious study and consideration. There is a saying goes that the unique bank culture will be the key to success for modern banks, making it of great importance to establish corporate cultures in Chinese banks. What is good to know is that the concept and theory of corporate culture has caught attention of the administrators of Chinese banks in the past several years, and the building up of corporate culture system is in shape.To claim that corporate culture can do well in building up the key competitiveness of banks and promoting banks’performances is one thing, to verify its connection is another. To have a better and clear view of such connection, an empirical study will be conducted in this paper. Talking about corporate culture, it can be rather abstract to measure and detect, therefore, to study the relationship between bank culture and bank performance, a way to measure bank culture is a prerequisite. Over the past decades of research, former researchers have come up with a variety of different corporate culture measurement instruments. Since bank culture belongs to the corporate culture in general, the study of bank culture can be based on former researches of the corporate culture, and the design of measurement instrument of bank culture can be build upon the corporate culture measurement instruments.A proper bank culture measurement instrument is designed in this scope, which identified eight culture factors among Chinese banks and they are teamwork, internal system, value, innovation, bank’s image, staff training, leader style and model behavior respectively. This instrument is applied in the empirical examination of the relationships between bank culture and bank performance. Three indicators are chosen for bank performance, and they are servicing ability, profitability and employee satisfaction. Results have shown that different culture factors exert different levels of influences on bank performances. Factors including teamwork, internal system, value, innovation have significant impact in the bank’s servicing ability; factors such as internal system, employment training and bank’s image can influence banks’profitability; and employee satisfaction are affected by factors of bank’s image, employee training, leader style and model behavior.