Research On The Relationship Between China’s Listed Banks Internal Control Environment And Operating Performance

The development trend of today’s global economy is world economic and financialintegration. Since the end of the last century, National financials accelerate the pace ofopening to the outside world, the most active one among many financial sub-areas, wasundoubtedly the capital market.Global financial integration, while promoting the rapiddevelopment of the global economy, but also speeding up the cross-border transmissionof enterprise risk, may bring the potential risks to a market area and even the globalmarket at the same time, increased the probability of international capital speculation anddestructive. At the same time, banks make the monetary fund which is so particulararticle, as its business object, that determines the characteristics of the high risk of thebanking sector. Since the establishment of the bank, banking supervisory authorities hasbeen focus on the risk management. Therefore, the control of the banking and financialbecome one of the important means of the financial sector to prevent financial instabilityand crisis, the bank’s risk control mechanisms has become the focus of attention of theparties.At the end of2006, China has finished the end of the transition period for accessionto the World Trade Organization, the full opening of China’s banking industry, enhancesbanking competition from the domestic level to the international level. Facing theincreasingly fierce international competition environment in the banking sector, China’sbanks must continue to improve the management level, to maintain good operatingperformance. Internal control environment as a basis for internal control, directlydetermines the role of other elements to play. The bank risk experience has shown thatthe absence of the internal control environment which plays a fundamental role is themain reason of internal control failures and thus brings the risk of the crisis. To getcontinued good operating performance, an inevitable requirement is to improve the banksinternal control environment. Optimization problem of internal control environmentsparked the attention of the global financial sector.This paper studies the relationship between China’s listed banks internal controlenvironment and operating performance. First of all, analyze and summarize the researchmethods and findings of the existing literature, introduce the basic theory of the internal control environment and business performance, analyze the Influencing Mechanism ofinternal control environment and operating performance, which laid a theoreticalfoundation for the empirical analysis below. Then analyzes the present situation ofChina’s listed banks internal control environment from the elements of the internalcontrol environment, analyzes the status of Bank Performance from three levels of assetsprofitability, safety, liquidity. At the research design part, build the index evaluationmodel of the internal control environment, which uses the five elements of the internalcontrol environment as a starting point. At the same time, use the rate of return on netassets, non-performing loan ratio and liquidity ratio as an index to measure the banksoperating performance. On this basis, we built a multiple regression model of the internalcontrol environment and business performance. This paper selected16listed banks datein China from2009to2011, and used SPSS software to empirical analysis,which finallyverified that there was a significant positive correlation between internal controlenvironment and business performance of listed banks in China; And the internal controlenvironment elements such as the development strategy, social responsibility andcorporate culture have a positive role in promoting Bank Performance; however, therelationship between organizational structure, human resources and banks operatingperformance is not significant. At last, we discussed on how to optimize the internalcontrol environment of listed banks to improve their operational performance, combinedempirical test results.