The Impacts Of Changes In Foreign Strategic Investors' Holding Share On Chinese Commercial Banking Risk

The introduction of foreign strategic investors(FSI)into domestic commercial banks is a significant action for the shareholding reform,establishing the risk control and improving the management of Chinese bank industry.But,FSIs bought Chinese commercial banks' shares at low price,reduced and sold shares they bought immediately after the lock-up period,and to gain handsome profits,which has sparked heated debates.There into,the relationship between changes in FSIs' holding share and Chinese commercial banking risk is one of those debates.Considering the practice and initial intention of the reform,backing to investigate this topic can offer valuable guidance for regulators to take precautions against and reduce financial risks,as well as realize higher levels of financial openness,and thus is of vital practical significance.This thesis elaborates the mechanism via which FSIs influence commercial banks' risks,and examines out their motives and historical development of holding shares in Chinese commercial banks.Basing on the panel data of several Chinese commercial banks in the period 2008~2017,a dynamic panel data model is constructed to analyze the impact of FSIs' share reduction upon the risk of Chinese commercial banks.And according to the empirical results,some policy suggestions and future research topics are given respectively.The main points of this thesis are as follows:1.Foreign strategic investors influence Chinese commercial banks' ability of risk by participating corporate governance and routine operational management.FSIs can optimize their ownership and normalize corporate governance mechanism.And on the other hand,they can also absorb advanced management experiences,techniques and methods to perfect management mode and improve management levels,and thus enhance the ability of risk management level.2.While the lock-up period was over,FSIs started to reduce their holding share.The history of FSIs participating shares in Chinese commercial banks can be divided into experimental period(1996~2000),developmental period(2001~2003),flourishing period(2004~2007),and declining period(2008~2017).By the end of 2007,there have been 33 FSIs participating shares in 25 Chinese commercial banks,and the total amount of holding shares is 84.4 billion.While the lock-up period was over after 2008,FSIs started to reduce their holding shares.And by the end of 2017,there have been 20 FSIs reduced their shares of 12 Chinese commercial banks,and the total amount of reducing shares is 143 billion.3.The history of Chinese commercial bank risk has obvious stage characteristics.Before the introduction of FSIs,Chinese commercial banks have relatively high risks.And with the introduction of FSIs,the risk of Chinese commercial banks gradually declined.While the lock-up period was over,Chinese commercial banks risks started to increase with FSIs' reduction of holding shares.4.The FSIs' share reduction may increase commercial banks' risks.FSIs share reduction made a dent in the power of foreign shareholders,such as,balancing,supervision and conditioning.Furthermore,the termination of strategic cooperation agreement between China and foreign countries weakened the technology spillover effect of advanced risk management coming from FSIs.Empirical analysis shows that a 1% change in FSIs' holding shares may cause 0.22% reverse change in commercial bank risk.In conclusion,FSIs' share reduction increases commercial banking risk of holding shares.This paper tries to explore the impacts of changes in FSIs' holding share on Chinese commercial banking risk with the methods of historical investigation and empirical analysis,which constitutes an extension of research perspective.But,this thesis fails to classify FSIs,and the sample of 21 commercial banks is incomplete,either.Besides,the selection of empirical variables needs to be perfected,and some expansion and improvement will be conducted in the future.