Research On Compensation Incentive Mechanism Of Chinese Policy Banks

In recent years, with the rapid economic development, Chinese Policy Banksplayed a huge role in our financial system. But with the rapid development ofbusiness, the Policy Banks have many problems, such as unclear positioning,competing with commercial banks, insufficient capital adequacy ratio and poorability to resist risks. Currently, Chinese Policy Banks (China Development Bank,Export-import Bank of China and Agricultural Development and) are beginningto reform and restructure, how to establish an effective incentive compensation isimportant. In this paper, we study the compensation incentives of policy banks,by the ways of literature analysis, comparative analysis and regression analysis,focusing on the compensation system of policy banks, compensation level and therelationship between compensation and performance.The research shows that the salary mechanism of policy banks is rigid, generallyreferring to the wage system of the state institutions, which is lack of effectiveassessment mechanism. The salary level of policy banks is generally higher thanthe state-owned commercial banks, lower than the shareholding commercialbanks. Policy banks have a smaller scale institution, but with a huge volume ofbusiness scale, the average loan balance is much higher than commercial banks.The profitability of policy bank was weaker than commercial banks, but with asmall scale of staff size, the per capita profit was bigger than the commercialbanks, the per capita profit/salary is higher than the ratio of commercial banks.The return on assets of Policy Banks is lower than the commercial banks, thePerforming loan ratio is higher than that of commercial banks, the human cost isless efficient than commercial banks. There was some relevance between thesalary and performance of Policy banks. There was The salary a negativecorrelation between the salary levels and operating performance, the size ofloans. There was a positive correlation between the salary levels and thenon-performing loan ratio.The research shows that in order to establish an effective policy banks salaryincentive mechanism, we must first clear the reform orientation, and in order toadapt the market development, in the establishment of the wage system, it isnecessary to retain a portion of wages of state institutions and referring tocommercial banks to establish a reference position grade wage system. Thesalary structure may consist of basic salary+position grade wage salary+performance pay rank+long-term incentive components. And should establishdifferentiated salary structure and scientific evaluation system.