Research On The Relationship Between Ownership Structure Of China's City Commercial Bank And Operating Performance

In the recent 20 years, China's city commercial banks, through unremitting efforts and struggle, have established a position in the financial and banking industry and built a comprehensive system of China's banking industry together with the state-owned banks and joint-stock banks. Along with the rapid development, they have also made great contribution for local economic development. After the urban cooperative banks'renaming to city commercial banks, encouraging cross-regional operations, the introduction of foreign strategic investors and IPO in the A shares and H shares capital market, city commercial banks move step by step to the right track and mature. Currently, there are a total of 134 city commercial banks, with total assets of 21.45 trillion Yuan which accounts for 11.38% in the banking industry. The establishment of city commercial banks is to solve the system risk problem of urban credit cooperatives in the 1990s, while the development and expansion of city commercial banks, after constant consolidation and increasing investment, is obvious.But the problems exposed are also worth studying and resolving. The business scope of city commercial banks is supposed to be financial needs of local small and medium-sized enterprises and local residents, while in process of assets-scale expansion, the city commercial banks fail to form their own business features and end up with homogenization with state-owned banks and joint-stock banks. Secondly, the equity ownership structure of city commercial banks' is improper in corporate governance performance and it is worth discussing how should the local government, as the largest shareholder, play to their strengths and avoid their drawbacks. In the last two years, there are increasing economic restructuring speed caused by the economy structure transformation and narrowing interest margin income caused by the changes of interest rate market, and the Internet gradually erode the traditional business of banking industry. These changes have brought enormous challenges to the China's banking industry in the recent two years. The self-redemption and innovation of banks is imperative. The city commercial banks are faced with the embarrassing situation of double increase in NPL ratio and non-performing loans, and they are not good at the small and medium financial services. Facing this series of hot issues, the paper begins to study problems arising from city commercial banks and then explore the roots from the perspective of equity ownership structure and operational performance.By constantly changing variables, this paper finally contains 36 equations for the multiple linear regressions, verifies the proposed hypothesis and finally draws the following conclusions:1) The nature of equity. This paper shows that when state-owned enterprise is the largest shareholder, its relationship with the ROA of city commercial banks is positively correlated. The largest shareholder of the three natures is positively correlated with the non-performing loan ratio.2) Equity ownership concentration. The largest shareholder with a large proportion of shares is in positive correlation with the city commercial banks ROA but in negative correlation with non-performing loan ratio. The equity restriction degree value Z is positively correlated with ROA but negatively correlated with non-performing loan ratio.3) in terms of ownership balancing degree, with shareholding ratio of the second to the fifth largest shareholder and the ratio of the proportion of the largest shareholder equity to quantify the degree of balance, when the higher equity balance degree, city commercial return on assets the higher, the lower the NPL ratio.4) Loans concentration. The greater the proportion of the largest shareholder takes up, the higher the loan concentration of city commercial banks will be. The equity restriction degree value Z is in negative correlation with loan concentration. The largest shareholder of the three properties is positively correlated with the loan concentration.5) The three variables above and operating performance. The loans concentration is negatively correlated with operating performance but positively correlated with the non-performing loan ratio.It is found through the empirical study above that there are still imperfect places in China's city commercial banks ownership structure, including the equity reforming method of "the state-owned enterprises withdraw and private-owned enterprises enter" and improving governance and management experience of city commercial banks through the introduction of private and foreign capital. It is worth practitioners' exploration and research how should city commercial banks achieve further differentiation and characteristic development under the environment of the "new normal" economic structure, and taking root in the local economy and serving local small and medium enterprises and local residents will be the choice for the differences development of city commercial banks to firm and consolidate its position In the banking industry with increasing competence.