Study On The Influences Of Bank Credit Risk On Corporate Governance Structure Of Commercial Banks In China

Commercial banks play indispensable role in economic activities, some of the bank’s characteristics make banks face high-risks and become very fragility. Nevertheless, the credit risk which arising from the credit business is the most important one in all of the risks. The capability of credit risk management is related to the long-term survival and development and also plays an important role of commercial banks. Since the late1980s, scholars from various countries are devoted to the technical exploration of the credit risk prevention, and a lot of measurement model has been established. However, with the explosion of previous financial.crisis, makes people’s focus began to shift from the technical aspects of the commercial banks to their own institution-building. More and more scholars believe that sound corporate governance structure can radically strengthen the bank’s credit risk prevention ability.With the accelerating pace of China’s market system and financial sector reform, the preeminent state-owned banks have begun to implement shareholding system reform, and gradually shift to the modern joint-stock commercial banks. The conduct of joint-stock reform had a positive effect to our commercial banks’ credit risk management, the rate of bad loans and performing loans have greatly decreased. However, reason of the decreasing is mainly the result of government intervention. In fact, China’s commercial banks still have many problems in its corporate governance. In order to fundamentally solve the problems in our credit risk management, it must be tracing the origin, start with the banking system, improve the corporate governance structure of commercial banks.This paper analyzed the nexus between corporate governance structure and commercial bank credit risk from the point of view of theoretical and empirical analysis. There are six parts of the content.The first part is the Introduction. In this part, I introduced the research background, research purposes, research ideas, research methods as well as the article’s main contribution and inadequate.The second part is a literature review. This paper list the research about corporate governance and its impact on the risk of commercial banks at home and abroad.The third part is the overview of the theory about commercial bank corporate governance structure and bank risk. This part introduced the particularity of commercial bank corporate governance structure. Additionally, the status quo of China’s credit risk has been described in this part.The fourth part is a theoretical analysis of the influences which corporate governance structure to commercial bank credit risk. The description is mainly from the internal governance structure and external governance structure.The fifth part is the empirical research on the impact of corporate governance structure to bank credit risk. This part chose China’s14listed commercials in2007-2010as a sample of panel data. Use NPL ratio to measure credit risk as the explanatory variables. The ownership concentration degree, the nature of equity, board size and independence of the board of supervisors scale, executive compensation and shareholding, capital adequacy ratio, the value of the concession and other related indicators as explanatory variables of corporate governance structure, and also selected asset size and capital leverage as the control variables.The last part of the paper is main conclusions and policy recommendations. According to the previously empirical results, some relative results were obtained. Then this paper gave some constructive suggestions on how to consummate China’s commercial bank corporate governance structure and enhance the capability of credit risk management.Overall, the main contributions of this paper are displayed below:First of all, the content is comprehensive. This paper mainly studied the particularity of corporate governance structure of commercial banks, and its influences to credit risk. Then reference to the relevant guidance documents and pre-scholars to build a commercial bank’s corporate governance framework. And then use the empirical study analyzes the relationship between China’s commercial banks in the current governance structure and credit risk. Finally, the paper made some policies and suggestions based on the results of empirical studies.Secondly, more in-depth theoretical is analyses. First, the reasons of the significance of commercial banks’corporate governance are improved. The particularity of commercial banks itself made the characters of high-risk and vulnerability. Second, in building a commercial bank corporate governance structure, sound corporate governance structure should also consider two aspects of internal governance and external governance. Third, this paper gave a detailed analysis of the impact of the bank’s internal corporate governance structure and external corporate governance structure to commercial banks credit risk. Fourth, this paper collected the relevant data for the2007-2010non-performing loans of commercial banks. According to the analysis of data found that China’s largest state-owned commercial banks still have many problems in total non-performing loans accounted. The state-owned banks in the pre-reform joint-stock need to be further deepened.Thirdly, the empirical research is sufficient. The paper chose fully dada as a sample. Then this paper used time series-cross-section regression analysis method, based on an empirical model to a more comprehensive analysis of the impact of corporate governance structure of their credit risk of commercial banks. In the select on variables selected, chose NPL and some other indexes about corporate governance structure.Finally, policy recommendations are targeted. According to the structure of the preceding theoretical analysis and empirical analysis, this paper presented a series of commercial bank corporate governance recommendations.However, because the capability of the author is limited, this article still exists the following deficiencies:First, because of space limitations, the theoretical analysis of corporate governance structure of commercial banks have not combined with the status quo of the corporate governance of commercial banks in China. The second problem is that the number of listed commercial banks in China is too small. So the sample number and the time span section is the main questions. In addition, due to the reform of commercial banks in China not depend, a lot of data is not readily available or accurate, so it may impact the accuracy of the results of empirical analysis.