The Empirical Analysis on China’s Commercial Banks Equity Structure and Risk-taking
|School||Huazhong University of Science and Technology|
|Keywords||Equity Structure Equity right balance Risk taking Empirical analysis|
Beginning with the American Sub-prime Mortgage Crisis, the global financial crisis has suffered a huge economic loss for the international society. This financial crisis reflects the serious flaws in Corporate Governance of related banks. Combining with the absence of risk regulation, the moral hazard caused by the principal-agent problem is just the most important reason for the financial crisis. The unreasonable ownership structure and flaws in risk management lead to tragedy by stimulating the bank to pursue short-term interest.Since the reform of shareholding system in China’s commercial banks, the governance efficiency and risk control of commercial banks have been improved greatly. However, there are still many problems. As the ownership structure is the most important aspects in corporate governance mechanisms, it is essential to discuss the banks’risk-taking behavior from the perspective of ownership structure. Summarizing the lessons of the financial crisis, we should re-examine the relationship between the corporate governance of commercial banks and their risk-taking issue, and research how to improve the ownership structure of commercial banks for strengthening their abilities to resist risks from a new perspective.In this paper, we select 14 commercial banks which are listing in China, through empirical analysis based on equity structure and their risk taking levels. And the results showed that the proportions of the state shares and the proportions of the first shareholder have positive correlation to the risk taking level, and it also shows that the shareholding ratio of the and the rate between the the first shareholder and the second shareholder have a negative impact on the risk taking. So to increase the proportion of foreign strategic investors shares and reduce the proportion of the state shares and establish a relatively dispersed and balanced equity structure have an active influence on the reducing of the banks risk taking level and also have positive significance on the enhancing the risk control in Chinese banks.