The Influencing Factors Of Commercial Bank’s Strategy Changes And Its Relationship With Performance

Since the end of1970’s in last century, China’s banking industry has achieved ahistorical shift from the financial system of the People’s Bank of China’s―unification‖after three stages of market-oriented reforms. Under the leadership of the central bank,a banking system dominates by the state-owned commercial Banks, joint-stockcommercial Banks and city commercial Banks, and coexists with policy Banks,foreign Banks and other financial institutions. At the same time, the tendency ofeconomic globalization, financial liberalization and the overall opening of Chinesefinancial market forces the Banks to get off the original pattern of development andput forward plans of strategic change to response to the growing financial competition.Therefore, strategic research of banking industry is not only very important but also avery urgent task.The paper selects14listed commercial banks from2007to2012for the study.Firstly, according to the operating characteristics of China’s commercial banks, weselect nine indexes to describe the characteristics of strategic group from the fivedimensions of safety, profitability, liquidity, business structure and credit structure,and this paper divides the commercial banks into strategic groups. The strategicchanges are measured by comparing changes of the strategic groups between twoconsecutive changes belong to the sample banks. On this base, we explore the factorsthat influence the strategic change of commercial banks from the four dimensions ofbank’s external environmental, management characteristics, the nature of bank, bank’sinternal environmental. Finally, this paper analyzes the relationship between strategicchange and bank performance based on FGLS estimate method, then we incorporatethe significant factors into the relation model of strategic change s and performance,the grouping regression method is used to analyze the data.The empirical results suggest that the sample banks should be divided into fivestrategic groups. This paper measures the strategic change based on strategic groupperspective, and the results show that the amount of strategic changes implementedreach16times involving11commercial banks during the study period. Then thepaper analyzes the factors that influence the strategic changes of commercial banks.The results show that the relationship between industrial intensity and strategicchanges exhibits U-shaped. Macroeconomic environment, the quality of staff and the number of banking institutions promote strategic changes. Moreover, the first twoplays a larger role in promoting strategic changes, However, customer loyalty plays alarger role in hindering strategic changes. And the direction of strategic changesaffected by the rest factors is the same as the hypothesis, but they are not significant.Lastly, strategic changes have significantly positive effect on bank performance. Inthe further research, we analyze the remarkable regulating effect of strategic changeon change performance. The results indicate that the bank performance affected bystrategic changes is nearly equal before or after grouping. It is also found that thethree factors of macroeconomic environment, the quality of staff, the number ofbanking institutions strengthen the relationship between strategic changes and bankperformance, while the regulating effect of industry density and regulation ofcustomer loyalty on change performance is not significant.