Research On Influence Of The Local Government Intervention To The Performance Of City Commercial Banks

City commercial banks were reconstructed on the basis of the original urban credit cooperatives in China. The People’s Bank of China regulated that shareholders of city commercial bank are city residents and local governments, and so on,local government holds about30%. The rule resulted that the local government can control the city commercial banks.On one hand,the local government is benefit to the city commercial banks,because government can provide some good policies for the city commercial banks;on the other hand,local government can control the flowing of the city commercial banks loans,which often flow to the low profit program, so that the profit of the city commercial bank would reduce.The situation that the local government controls the city commercial bank is favorable or unfavorable to the development of city commercial bank? Is it the same that the role of the local government at different stages of development.For this problem,different researchers have different ideas.Foreign scholars have two different ideas:one is that the local government is benefit to the development of the city commercial bank,because,ownership concentration can effectively solve the problem of "free riders" and government can provide some good policies for the city commercial banks;the other is that the local government is not benefit to the development of the city commercial bank,because that government shareholder would infringe on the interests of other shareholders.Chinese scholars also have different ideas:some think that the state-owned nature of the largest shareholder did not significantly affect the development of the city commercial banks and the higher the equity concentration is,the better the bank’s performance.some think that the state-owned nature of the largest shareholder is not benefit to the performance of banks,and when government holds more than50%of the shares,the performance will reduce. In order to come to my own answer,I explore the problem from the form、 developments and present of city commercial banks.Finally,I find that the local government promoted the development of city commercial banks.But,at present,the local government brings out the problem of single ownership structure and high degree of concentration of loans.In order to deepen the discussion of this problem,I explain the causes and ways of local government intervening in the city commercial banks.Finally,I find that the local government financing platform is the bond of local government and city commercial banks,the local government control the flowing the loan by the local government financing platform.In order to illustrate the role of the local government,I collect the four years’data of22city commercial banks, studying further the problem by empirical analysis.Lastly,the empirical results show that the nature of the largest shareholder did not significantly affect the return on net assets and non-performing loan rate of the city commercial banks. When the local government holds city commercial banks,the local government will negatively affect the return on net assets and non-performing loan rate of the city commercial banks.Finally,I suggest that the situation of the local government holding the city commercial banks shoud be changed.In order to change the situation,we must change China’s current political system and officials appraisal system and broaden the local government financing channels.The main innovations of this paper are that this paper take the latest city commercial bank’s panel data and explore systematicly this problem from the point of view of local government holding firstly; and take the view of unition of history and logic; Finally,this paper think the relationship between two is not just an economic issue,but a political issue.