Research On The Ownership Structure, Loan Concentration And City Commercial Banks Performance

The first branch of the City Commercial Banks--Shenzhen City Commercial Bank was established in June22,1995. The City Commercial Banks group has gone for17years by now. Differently from other Commercial Banks,they were born directly from the other financial institutions-City Credit Cooperatives. Which also known as the " City Commercial Banks originated from City Credit Cooperatives ".In recent years, the rapid development of City Commercial Banks also attract people’s attention, cross-regional business, public, comprehensive development, the comprehensive strength of City Commercial Banks increased rapidly.Many of them also introduced diversifical capitals, the ownership structure further dilute local government’s shares.Did the ownership structure influenced the City Commercial Banks performance, the government ownership increased or reduced its business performance,and how does the ownership structure affects the performance.All these are this paper pay attention to.At present, most of the research on bank performance articles are aimed at banks which have listed, because these banks’s datas are relatively easy to obtain, The study of the City Commercial Banks is less, even if being studied, most are the relations between the government ownership and the City Commercial Banks performance, for the meticulous research about ownership structure articles quite Less. This paper collected63City Commercial Banks from2005to2011and the local macroeconomic variables through various channels. The sample covers20provinces and two municipalities, the paper not only researched the relationship between City Commercial Banks performance and ownership structure, but considered loan concentration,We want to examine that how does the ownership structure affect loan concentration, and finally how to affect City Commercial Banks performance.This paper consists of five chapters:Chapter I is the introduction. Chapter II is the related concepts, theoretical basis and empirical research review. Chapter III is the analysis of City Commercial Bank’s development process and development current situation. Chapter IV is the empirical analysis. In this chapter, through the City Commercial Banks data collected, established the performance and loan concentration model. Chapter V is the empirical results and recommendations. We put forward what the City Commercial Banks should do if they want to realize the City Commercial Banks performance’s improvements.The results show that:(1) From the ownership concentration, the more concentrated the ownership of City Commercial Banks, the rate of City Commercial Banks not-performing loans is higher, the performance is lower.(2) From the ownership property, when the first major shareholders is the local government, the return of total assets is low; Introducing foreign stocks failed to improve the City Commercial Banks performance.(3) From the balance of ownership, when the Z index increases, City Commercial Banks not-performing loan rate is lower, operating conditions is better.(4) From the relationship between ownership structure and loan concentration,when the ownership concentration is higher, and the local governments is in a position of absolute control, the City Commercial Banks’s single customer loans accounted for the proportion of net capital and ten largest customers accounted for the proportion of net loan capital is also higher.(5) The ownership concentration influenced the performance by the loan concentration.The innovationes of this paper are that:(1) In the process of research, the loan concentration were added to the model,we want to find the new evidences that the ownership structure affected the performance of City Commercial Banks’s.(2) We added the ownership balance when measure the ownership structure, And on the measure of ownership property, we considered that whether the first major shareholder is the foreign capital which enriched the connotation of ownership structure.(3) This paper takes long time to collecte63City Commercial Banks232annual report in2005-2011.The sample covers20provinces and two municipalities.Compared to the other City Commercial Banksresearch, this datas contain more widely, sample capacity is more big.The inadequacies of this paper are that:(1) The establishment time of City Commercial Banks are short, many of them began to disclosure the annual report in recent years, so the data sources are missing, which has influence to the establishment of model.(2) This paper only consider the state ownership and foreign ownership in ownership structure, the corporation ownership and the nature person are not taken into account; secondly, when we conside City Commercial Banks loan concentration,we only consider the loan to a customer or a groupd,didn’t consider the loan to a regin or industry.In a word, this paper provides new evidence for the relationship between the City Commercial Banks ownership structure and performance, but also has important practical significance to the deep development of City Commercial Banks. Although the asset size of City Commercial Banks is much smaller than the state-owned commercial banks, they made an indelible contribution for the local economic development. Establishing good corporate governance and equity structure, The City Commercial Banks can better play its functions on resource allocation. With China’s accession to the WTO in2001, five years of the transition period has ended, the foreign banks bring in advanced management experience to the domestic banking industry.But at the same time, they will also complete with domestic banks with their advanced management mechanism and corporate governance in high aspects, As a member of our banking system, improve the management mechanism and performance can help City Commercial Banks to survive in the fierce competition.