A Study On The Impact Of Ownership Structure Of City Commercial Banks On Operating Performance

In 1990s,in order to rectify the local financial order and decentralize local financial risks,the State Council established the city commercial banks based on the the urban credit cooperatives through the local finance,urban enterprises and local residents' stock buying.The purpose of the establishment was to serve the local residents,to support the development of local small and medium-size enterprises and to boom the local economic.In recent years,the city commercial banks has grown steadily,and has played an important role in solving local corporate financing bottleneck problems and promoting local economic growth.Ho we ver,compared with large-scale state-owned banks and joint-stock banks,city commercial banks still have a large gap in operating performance,which mainly due to the internal corporate governance.Although some have established a corporate governance structure,the ownership structure is still unreasonable,such as the prevalence of government holdings and the high holding amount of the government and its 'concerted action',restricting the corporate governance mechanism to some extant,thus increasing the city commercial banks' risk-taking and reduce the performance.Though previous research has studied how ownership structure influenced the banks5 performance from the perspective of corporate governance,most of the specialists ignored the specificity and purpose of the city commercial banks and treated them as general commercial banks to deal with,or just selected some city commercial banks from certain areas as a sample,or just chose profitability index and non-performing loan ratio as explained variables in the empirical test.So the comprehensive operating performance index was not accurately measured,nor was the affecting mechanism carefully researched.In this paper,88 municipal city commercial banks have been chosen as samples.Besides,the horizontal and vertical comparison on how government ownership structure impacts the operating performance has been made from the perspective of banks' traditional 'three index'(profitability,safety and liquidity capacity).Additionally,based on the 'three index' and combined with asset indicators and development capacity indicators,the paper use principal component analysis to build an integrated operating performance indicator to comprehensively reflect city commercial banks' operating performance.By constructing the panel data model,the empirical analysis is made to examine the influence of the current ownership structure on the integrated operating performance.On the basis of the current operating system of city commercial banks,the paper chose the logic(government ownership--credit behavior--integrated performance)to analyze the mechanism in which ownership structure impacted the city commercial banks' performance.Credit behavior is measured from the loan scale,term,industry distribution and concentration.Combining the theory and empirical methods,the paper uses the cross of ownership structure and credit behavior as explanatory variable to analyze how the government ownership structure impacts the integrated performance through credit behaviors.And,according to the macroeconomic differences of cities,the paper examines the impact of city commercial banks in different regions with different degrees of development.As the results of theoretical and empirical analysis show,the government ownership structure has a significantly negative impact on the integrated performance of city commercial banks,and with the share-holding proportion of local government and local state-owned legal corporation(which is considered as the government's concerted action)increasing,the city commercial banks' integrated operating performance significantly decreased.Specifically,government ownership will reduce the integrated performance by affecting banks' credit behavior,such as increasing the loan scale,increasing the loan concentration,extending loan terms and increasing construction and real estate loans while reducing the wholesale and retail loans.In addition,the government can improve the integrated performance by appropriately increasing the infrastructure loans to a certain extent,which is more significant in backward cities(three lines and below).The empirical results also confirm the'political view' of government ownership in developed cities and support the'development view' of government ownership in backward cities,which explains the rationality of government ownership in backward cities in a certain sense.Finally,based on the results of theoretical and empirical analysis,the paper puts forward policies to optimize ownership structure,dilute the government share-holding proportion,timely introduce qualified foreign strategic investors,strengthen internal and external supervision and management to enhance the city commercial banks'integrated performance in order to better serve the local economic development.