Research Of The Impact Of Ownership Structure On Bank Risk Taking In China

Since the global financial crisis in 2008,banks' risk-taking research receives the widespread attention by scholars.However,the banks' risk-taking research is currently more focused on external research perspectives such as market constraints,and less on the internal corporate governance problem.The ownership structure is an important part of corporate governance.It affects banks' operational performance,and also affects the banks' risk-taking willingness.Since commercial banks experienced in a series of major institutional reform such as share division,publicly listed and so on,ownership structure gradually shows a trend of diversification,but higher equity concentration,lack of checks and balances among shareholders,higher state-owned shares are still basic characteristics of the ownership structure of commercial banks in China,which will have an important impact on banks' risk-taking behavior.Under this background,to study how ownership structure affect banks' risk-taking behavior in China has an certain practical significance.In order to study the impact of ownership structure on banks' risk-taking behavior in China,this paper firstly summarizes banks' risk-taking behavior,ownership structure,and the mechanism of ownership structure on banks' risk-taking behavior from a theoretical perspective.This will lay a theoretical foundation for analyzing the impact of owenership structure on banks' risk-taking behavior in China.Then,this paper examines the current situation of ownership structure and banks' risk-taking behavior in China,finding that there is a certain correlation between the two.Then,based on the data of Chinese listed commercial banks from 2006 to 2015,this paper uses the GMM method to analyze the impact of ownership structure on the risk-taking behavior of commercial banks from equity concentration,equity property and equity restriction,and also analyze the effect of interest rate liberalization on the correlation between the two sides.The results show that there is a significantly positive relationship between equity concentration and the banks' risk-taking behavior,which means that banks with higher equity concentration have higher principal-agent problem and then higher risk levels.Equity restriction and bank risk taking are negatively correlated,and the restriction between small-medium shareholders and large shareholders can weaken the banks' risk-taking behavior.Meanwhile,state-owned and government-backed banks are more motivated to increase the risk of banks than other banks.Last,interest rate liberalization helps to weaken the positive effect of equity concentration and equity property on commercial banks' risk-taking behavior,and to strengthen the negative effect of equity restriction on commercial banks' risk-taking behavior.Last,the paper draws the conclusion based upon empirical application and bring forward six policy suggestions respectively from reducing the percentage of shares held by the largest shareholder of the bank,reducing government intervention,attracting foreign investment,strengthening market constraints,constructing management incentives,and improving the formation mechanism of interest rate liberalization.