Research On The Performance Of Commercial Banks Based On The Perspective Of Internal Governance Structure

Commercial banks occupy an important position in the modern financial system,stability and efficient operation is directly related to the normal operation of China's financial system.Therefore,it is very important for commercial banks to have a scientific,stable and sound internal governance structure,which is the key to maintaining competitiveness.Since 1995,the reform of the commercial banking system has continued to deepen,including various measures such as optimizing the shareholding structure,introducing foreign capital,and promoting listing.The purpose is to make the governance structure of China's banking industry more reasonable.At present,China has formed a competitive situation between banks of different sizes and different natures.This paper studies the relationship between the internal governance structure of China's commercial banks and their business performance,and proposes different policy recommendations for commercial banks of different sizes.This has important theoretical and practical value for understanding the internal governance structure of China's listed commercial banks,improving the internal governance mechanism of China's commercial banks,and improving the core competitiveness of China's banking industry.This paper firstly sorts out relevant literature s at home and abroad,finds that most scholars believe that moderate equity concentration,board size can promote the improvement of commercial banks' business performance,executive incentives have a significant effect on the improvement of commercial banks' business performance.After that,the author defines the concept of corporate governance,internal governance and commercial bank's business performance,combs the principal-agent theory,incomplete contract theory and stakeholder theory,in-depth analysis of the impact of various parts of the internal governance structure on the business performance of commercial banks.Then introduced the history of the current commercial banks,the specific present situation of listed commercial banks' equity concentration,the structure of the board of directors,executive compensation,asset size,and the profitability,safety and liquidity of banks,find differences between banks of different sizes for subsequent empirical analysis.This paper selects the relevant variable data of 25 listed commercial banks in China from 2007 to 2017,the explanatory variables are the capital return rate indicators including risk factors designed by Bankers Trust,the indicator is calculated by variables such as commercial bank net profit,asset size,and macro data,the interpreted variables are divided into four aspects,First,the degree of equity concentration is expressed by the use of the first-largest shareholder control ability and the shareholding ratio of the top ten shareholders;Second,the board of directors uses the board number variable and the independent director ratio variable;Third,the executive compensation incentive level is represented by the logarithm of the top three executive compensation,Finally,select bank asset size,loan ratio and non-performing loan ratio as control variables.Because the STATA software can handle unbalanced panels very well,therefore,using this software to conduct multiple regression analysis on the research samples of the total commercial banks and commercial banks of different sizes,an empirical study on the internal governance structure and business performance of the sample of the total commercial banks and commercial banks of different sizes,the conclusion of the difference in this paper is as follows:(1)When the first major shareholder's ability to check and balance is stronger than other shareholders,it will have an adverse impact on the business performance of commercial banks,and moderate equity concentration will promote the bank's business performance.(2)Moderate board size can play a certain role in promoting the operation of commercial banks.At present,in the regional joint-stock commercial banks,the size of the board of directors is relatively reasonable,and its promotion relationship is the most significant.(3)There is a significant positive correlation between independent directors and business performance in the overall sample study,which indicates that the independence of the current board of directors has improved.However,through the regression analysis of the national joint-stock commercial banks,it was found that the proportion of independent directors was negatively correlated with the bank's operating performance.(4)There is a significant positive relationship between the executive compensation level and the commercial bank's business performance,however,when conducting regression analysis on large state-owned commercial banks,we found that compensation incentives have no significant negative relationship with bank performance,through data analysis,it is found that the possible reason for this situation is that the executive compensation level of state-owned commercial banks is significantly lower than that of other types of banks,as a result,the degree of incentivesfor senior executives of state-owned commercial banks is not enough,and there is no significant negative relationship.Finally,this paper proposes the following policy recommendations: First,implement differentiated equity reform and build a competitive check and balance environment,for example,the state-owned shares of state-owned large commercial banks and national joint-stock commercial banks still have room to reduce,moderately relax the entry threshold for private capital and foreign capital,etc.The second is to rationally adjust the structure of the board of directors and optimize the independence mechanism of directors,for example,state-owned banks and joint-stock banks should appropriately adjust the structure of the board of directors according to factors such as asset size,business scope,and business decision-making to ensure the effectiveness of decision-making and supervision;The third is to optimize the management competition mechanism and improve the medium and long-term incentive mechanism,for example,the management should be selected by a market-based competitive approach,and monetary and non-monetary compensation incentive mechanisms should be established to align the stable and sustainable development of the bank with the management's own interests.