Study On Mechanism Of Commercial Bank’s Ownership Structure On Credit Risk

In Europe, the outbreak of the sovereign debt crisis happened after the American Sub-prime Mortgage Crisis. Credit rating of a number of European banks and financial institutions was downgraded in the2012by authoritative rating agencies. The restructuring of Dexia Bank push the European banking crisis to the more alarming levels. This round of financial crisis reflects the serious flaws in Corporate Governance of related banks. Combining with the absence of risk regulation, the moral hazard caused by the principal-agent and the unreasonable ownership structure and flaws in risk management lead to tragedy by stimulating the bank to pursue short-term interest.Since the reform of shareholding system in China’s commercial banks in2007, the governance efficiency and risk control of commercial banks have been improved greatly. As the ownership structure is the most important aspects in corporate governance mechanisms, it is essential to discuss the banks’risk-taking behavior from ownership structure.We should re-examine the relationship between the corporate governance of commercial banks and their risk-taking issue, and research how to improve the ownership structure of commercial banks for strengthening their abilities to resist risks from a new perspective.In this paper, we select11commercial banks which are listing in China, through empirical analysis based on equity structure and their risk taking levels. And the results showed that the proportions of the state shares and the shareholding ratio of the rate between the the first shareholder and the second shareholder have positive correlation to the risk taking level, and it also shows that the proportions of the first shareholder have a negative impact on the risk taking. So to reduce the proportion of the state shares and establish a relatively dispersed and balanced equity structure have an active influence on the reducing of thebanks risk taking level and also have positive significance on the enhancing the risk control in Chinese banks.