Research On The Relationship Between Capital Strcture And Operating Performance Of Commercial Banks In China

With the accelerating speed of economic globalization and the full liberalization of thefinancial sector after China’s accession to WTO, the entry of foreign banks has broughtenormous pressure to the development of Chinese commercial banks. In order to gain acompetitive advantage, Chinese commercial banks have to improve their businessperformance which is a key solution. According to the modern capital structure theory, thecapital structure mainly has an impact on its business performance from two aspects: on theone hand, capital structure directly affects their financing costs and financing risks; on theother hand, by determining its governance structure the company’s capital structureindirectly affects business performance. As the special enterprise operation, thecharacteristics of capital structure of commercial banks are different from general business.So the problem of the relationship between capital structure and the bank businessperformance, not only can reveal their immanent connection, also has great practicalsignificance.In this paper, we have sampled the performance of listed commercial banks in2007-2012for the research. And we have used the principal component analysis to analyzeprocess the data of listed commercial banks and have got a comprehensive performanceevaluation of listed commercial banks. We divided commercial banks into two categories inaccordance with the nature, namely large commercial banks and small and medium sizedcommercial bank. Then we built two regression models and combined two results with thestatus quo. We discussed the similarities and differences between the two types ofcommercial banks.Finally, for the optimization of the capital structure of listed commercialbanks we put up the recommendations and policy about enhancing the bank operatingperformance.Research found that the relationship of two types of commercial banks between capitalstructure and business performance is different. The common is that: supplementary capitalratio, capital adequacy ratio has consistent relationship with the business performance; Thedifference is that: Two types of commercial banks’ ownership concentration are quitedifferent impacts on business performance, the ownership concentration of the largecommercial banks has negative correlation with its business performance. However, the ownership concentration of the small and medium sized commercial banks has positivecorrelation with its business performance and their owned properties are conducive to theimprovement of business performance. In addition, the different nature of the scale of thebank assets effects on business performance in different ways.