The Empirical Study On The Influences Of Corporate Governance On Commercial Banks’ Risk-taking In China

Some crises happened over the years exposed defects and problems in the bankingcorporate governance, and make people find that the lack of good corporate governance isan extremely important reason leading to excessive risk-taking behavior. With thecontinuous mature and development of China’s commercial banks, the importance ofcorporate governance is increasingly highlighted. Therefore, to further improve corporategovernance of China’s commercial banks, study the effect of corporate governance ofcommercial banks’ risk-taking has important theoretical and realistic significance.This paper research the influence of corporate governance of commercial bank on therisk-taking behavior. First, analyzes the impact of ownership structure, supervisionmechanism and incentive mechanism on commercial banks’ risk-taking. Secondly, usingpanel data from the annual reports of13listed banks from2007to2012, author empiricallystudies the influence of corporate governance of commercial bank on the risk-takingbehavior in China. There are two major parts, the first part analysis the overall sample as awhole, the second part divide the sample into two groups by the level of state-ownedshareholding proportion and separately analysis two groups. The results of first part are asfollows: the first shareholder’s shareholding proportion and risk-taking behavior hasU-shaped nonlinear relationship. Excessive state ownership has no significant impact onbanks’ risk-taking. The size of Board has no significant effect on banks’ risk-taking. Thehigher the proportion of independent directors is, the lower the bank’s risk-taking level.The increasing scale of Supervisory Board has a negative impact on commercial banks’risk-taking. The high level of executive remuneration has a negative impact on commercialbanks’ risk-taking. The results of second part are as follows: the listed banks’ state-ownedshareholding proportion more than50%are influenced greatly by the first shareholder’sshareholding proportion and state-owned proportion, the listed banks’ state-ownedshareholding proportion less than50%are influenced greatly by the size of Board, the proportion of independent directors, the scale of Supervisory Board and the level ofexecutive remuneration. Finally, according to theoretical analysis and empirical results,combined with the status quo of China’s banking industry, author proposes relevant policysuggestions: improve the ownership structure and promote the diversification of ownershipstructure, improve the mechanism of supervision constraint, establish an effective incentiveconstraint mechanism, improve the information disclosure mechanism and strengthen therole of market discipline.