Ownership Structure And Performance Of Rural Commercial Banks

Rural commercial bank is a kind of local financial institution, which develop based on the early Rural Credit Cooperatives Association and Rural Cooperative Bank in China. But in the aspects of setting-up conditions, ownership structure, corporate governance structure, there are some differences. The rural commercial banks break the service scope of mainly on the traditional agriculture, farmer and rural area to a broader business range, which benefits the regional economy between rural areas and towns.Rural commercial banks have been developing rapidly in recent years with business scale expanding and profitability increasing. However, the rapid development has also exposed some common problems of rural commercial banks: the first is the market positioning. The business of rural commercial banks is mainly based on the traditional services for agriculture, farmer and rural area. They combine the traditional business with the urban financial services, which to some extent decides the future market positioning of rural commercial banks. Second is the ownership structure of rural commercial banks. Rural commercial banks mostly are based rural credit cooperative associations and their shares are formed by members in democratic management. Since their foundation, there has shown the obvious problem of local government leading and excessive ownership concentration. Rural commercial banks inherit this feature of the rural credit cooperatives associations, which may lead to a damage on the interest of themselves and minority shareholders. Finally is the external problems of depositors’ protection mechanism absence caused by internal control. In these problems, the problem of ownership structure is the basis. It not only determines the market positioning of rural commercial banks, but also the service model, and then directly affects the performance. In this premise, the study of relationship between the ownership structure and bank performance of rural commercial banks is necessary. This thesis takes the unlisted rural commercial banks established before 2015 in Jilin area as samples, collects data from the China Banking Regulatory Commission website, Sample bank website and the Financial Times, sets dummy variables, establishes multiple regression model and empirically analyzes the ownership structure, credit structure, performance and transmission mechanism of rural commercial banks. The author believes that the highly-concentrated equity is beneficial for rural commercial banks in broadening financing channels, improving operating mechanism and rapid development. But in the long term, the high concentration of equity, will gradually reduce the level of inner control in the bank, affect customers’ experience and reduce anti-risk ability of the banks, which ultimately affects the profitability of rural commercial banks.This thesis can be divided into five parts: the first part describes the background and significance of the research; introduces the research results both in domestic and foreign countries. The second part is the brief introduction to the general theory of corporate ownership structure and performance. The third part makes an introduction to the current situation of the ownership structure and performance of rural commercial banks. The fourth part selects the rural commercial banks in Jilin province as samples, sets up multiple regression models and carry out empirical analysis. The fifth part makes a conclusion based on the comprehensive analysis of the previous contents and put forwards some personal views on the future development of rural commercial banks.