Tunneling under the Asymmetric Allocation of Equity and Control in Rural Commercial Banks
The existence of provincial associations has changed the corporate governance structure of rural commercial banks,but the tunneling behavior of rural commercial banks under the governance of those provincial associations has yet to be studied.The provincial associations,through administrative empowerment by the provincial governments,deprive part of the control rights that originally belong to the shareholders of rural commercial banks,resulting in a unique corporate governance model of asymmetric allocation of equity and control in rural commercial banks.Study finds that the impact of asymmetric allocation of equityand control on tunneling of rural commercial banks is closely related to marketization.In more highly marketized areas,a stronger asymmetric allocation of equity and control implies stronger control of the provincial associations over rural commercial banks,and stronger tunneling of rural commercial banks whereas this effect is not significant in less marketized areas.Further research on the equity structure shows that the nature of equity and equity concentration do not have an impact on tunneling of rural commercial banks under the asymmetric allocation of equity and control.In contrast,the higher the degree of equity restriction,the stronger the tunneling of rural commercial banks under the asymmetric allocation of equity and control in more marketized areas.In addition,asymmetric allocation of equity and control has a significant positive effect on the loan concentration of rural commercial banks within regions with high marketization.The results of this paper suggest that the impact of the provincial association model on the tunneling of rural commercial banks should be viewed on a region-specific basis,and the reform of provincial associations should be tailored to local conditions rather than a one-size-fits-all approach.The findings of this paper provide strong support for"one province,one policy"to promote the reform of the provincial associations,and provide useful reference on how to protect the interests of small and medium shareholders of rural commercial banks.
rural commercial bankasymmetric allocation of equity and controltunnelingmarketizationreform of provincial association
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