The Empirical Analysis Of The Impact Of Ownership Structure On The Efficiency Of China’s Urban Commercial Banks

The Urban commercial banking group, as an important part of China’s banking industry, is established on the basis of the original credit cooperatives, as a local financial institution, it plays a significant role on the local economic development. According to the commitments that made when China joins the WTO (world trade organization) China’s banking industry has been fully opened since the end of year. Due to the fierce competition in the banking industry, China’s urban commercial banking group not only faces the threat from the domestic industry but also faces the challenges of the international industry. In addition, the development of city commercial banking group mostly depends on the local economic characteristic because of its small scale. There are a number of disadvantages when comparing with other state-owned banks. In order to sustain development in the fierce competition, it is important for these commercial banks to improve their operational efficiency continuously.The research of the relationship between the Ownership Structure and the Banking Efficiency plays an important role on improving the bank ownership structure and enhancing the banking efficiency. Therefore, it attracts many scholars attention both at home and abroad, yet reached different results. Among them, the studies from the foreign scholars can be summarized into two categories:(1) Ownership structure and banking efficiency has significant correlation.(2) Ownership structure and banking efficiency has no significant correlation. The researches from domestic scholars on ownership structure and bank efficiency are mainly classifid into two aspects. One is the compare of banking efficiency among the different structure of property rights. Most of the scholars have come to the conclusion that is basically consistent, that the efficiency of non-state-owned commercial banks more efficient than state-owned commercial banks. The other is about the compare among different ownership concentration, shareholding ratio and different equity properties. And scholars finally think that there is a significant correlation between them. Considering that, there is little research of the disadvantages and shortcomings of the literature on the relationship between ownership structure and efficiency of urban commercial banks, this paper choose China’s city commercial banks as a sample to study the relationship between ownership structure and efficiency.The Empirical conclusions of this paper are as following:(1) Different nature of the shareholders impacts the efficiency of China’s urban commercial banks differently. The empirical results show that the state holds a positive impact on the efficiency of urban commercial banks, as well as the first major shareholder. Institutional ownership have a negative impact on the efficiency of urban commercial banks.The city commercial bank improves their efficiency through the listing and financing, but the result was not significant.(2) Ownership concentration has a negative effect on the efficiency of urban commercial banks. The proportion of top five shareholders has a negative effect on the efficiency of urban commercial banks. The proportion of top ten shareholders has a negative effect on the efficiency of urban commercial banks. The capacity of the largest shareholder holding has a negative impact on the efficiency of urban commercial banks, but the effect is not obvious.The regression results for the selected control variables show that the equity-asset ratio has a significant negative impact on the efficiency of urban commercial banks; there are no significant correlation among asset size, NPL ratio and board size.