Analysis On The Behavior,motivation And Prevention Of Commercial Banks’ Participation In Listed Companies In Financial Fraud

The financial disintermediation and interest rate liberalization make the competition of the banking industry keen,and it pays more and more attention to the participation of listed companies in financial market activities.Commercial banks should follow market trading rules,act in good faith,and operate in accordance with laws and regulations,or the foundation of the financial market would be broken.The Central government takes especially financial risks,as the first of the three critical battles.Banks are the core of the financial industry,if banks assist enterprises to evade the supervision of auditing and regulatory,it will undoubtedly reach the bottom line of intolerance.Paper focuses on Kangdexin’s financial fraud incident,using case study method to analyse the role of bank of Beijing in the Kangdexin financial fraud and illegal disclosure of information,and tried to find the possible reason for its participation in the listed company’s financial fraud.In the end,to provide the direction of supervision and improvement and countermeasure suggestions for standardizing the behavior of commercial banks and safeguarding the rights and interests of financial market participants.First,this paper holds that it can be assumed that Beijing Bank participated in Kangdexin’s financial fraud.The concrete manifestation of this are the following.The Bank of Beijing and Kangdexin signed the Cash Management Cooperation Agreement in 2014.The signing process,content and terms were illegal and non-compliant,which opened a convenient channel for The financial fraud of Kangdexin’s monetary fund and operating income.As the lead underwriter of Kangdexin’s six SCPs,Bank of Beijing still acquiesced in not disclosing and explaining the agreement in the issuance documents in knowing that the agreement under risks,which made the false large amount of monetary funds become a guarantee to reduce the risk of bonds.In the follow-up management work,it also failed to timely inform investors of the change of Kangdexin’s capital,the purpose and flow direction of the raised funds,which caused the default of Kangdexin’s ultra-short financing and infringed the legitimate rights and interests of bond investors and stock holders.As for the motivation of Bank of Beijing’s participation in fraud,this paper considers the external industry environment,regulatory environment,internal interest drive and internal regulatory issues.The study finds that since 2010,due to the deepening influence of interest rate liberalization,financial disintermediation and other policies,as well as the external pressure brought by the development of science and technology,the competitive pressure and the urgent need for transformation of the banking industry have increased.Meanwhile,the national supervision system under the new situation is not yet sound,the force of supervision still insufficient,which has become important factors for the emergence and continuation of irregularities of the Bank.For the Bank,the demand for strategic business transformation and the relationship maintenance of key customers might make it ignore its own responsibilities in the business and catering to customer needs.Besides,the defects of the internal supervision system inner the bank also provided the soil for its illegal behavior.In addition,the performance appraisal needs of branches and employees as well as the interest temptation were also important motivations to make the bank to participate in the financial fraud of listed companies.In view of these behaviors and motivations,this paper puts forward risk prevention and control measures from the aspects of the industry,supervision and the bank itself,in order to regulate the behaviors of commercial banks and protect the rights and interests of financial market participants.The main contribution of this paper is that,for financial fraud of listed companies and information disclosure violations incidents,to transform the research object and start from the perspective of commercial banks,not only can make people pay close attention to all the participants in the relevant events and their responsibility,but also contribute to the further regulation of the behavior of financial intermediaries and the protection of the rights and interests of financial market participants.