How Bank Capital Structure Affects Business Performance---- Empirical evidence from Chinese Commercial banks

Luo, Ting (2010) How Bank Capital Structure Affects Business Performance---- Empirical evidence from Chinese Commercial banks. [Dissertation (University of Nottingham only)] (Unpublished)

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Abstract

In the end of 2006, China realizes the opening of financial market, thus Chinese commercial banks have to face the global competitors. How to exist and develop in the market with fierce competition has been more and more significant to Chinese commercial banks. Because commercial banks’ business performance is the overall reflection of banks’ competence, so they should consider improving the bank business performance. Thus this study aims to discuss how commercial banks’ capital structure affects its business performance, and gives the recommendations to optimize the banks’ capital structure and improve commercial banks’ business performance.

This study introduces relevant fundamental theories of capital structure, and reviews relevant researches on the relationship between bank capital structure and business performance firstly. Secondly, this study redefines the meaning of Chinese commercial banks’ capital structure and business performance and analyzes the current situation and problems of Chinese commercial banks. Thirdly, this study selects 11 Chinese commercial banks as the sample to do empirical research. Based on statistic analysis, the main conclusion of this study is as following.

(1) The relative concentration of ownership structure will enhance the business performance for Chinese commercial banks.

(2) The characters of the largest shareholders have no association with the business performance.

(3) The proportion of subsidiary capital in banks’ total capital has significant positive correlation with bank business performance.

(4) Capital adequacy has significant positive correlation with bank business performance.

Based on the conclusion, this study proposes the recommendations of improving Chinese commercial banks with the perspective of optimizing capital structure, including optimizing core capital structure, increasing the proportion of subsidiary capital, enhancing risk management, concerning more about the supervision to capital adequacy, perfecting capital market environment.

Key words: Commercial bank, Capital structure, Business performance

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 14 Mar 2011 09:52
Last Modified: 23 Oct 2016 22:37
URI: http://eprints.nottingham.ac.uk/id/eprint/23688

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