Corporate Governance in Banking Organizations in China

In contrast with conventional economic, political and institutional studies of corporate governance, the present thesis brings together varieties of capitalism (VoC) and discursive institutional approaches in order to analyze how corporate governance is constituted in Chinese banking organizations. The discursive institutions which produce and reproduce national arrangements of corporate governance in banking are analyzed as operating across three related levels; namely, legitimacy, paradigm, and frame. By comparison with the existing national models of corporate governance in banking, the thesis holds that the corporate governance of Chinese banks has a hybrid form that combines elements of the Continental stakeholder model, the Anglo-Saxon shareholder model, and the State-affected model. The thesis finds that the Chinese discursive institutional configuration largely shapes bank governance and is thus crucial to establishing a governance structure that is clearly distinguishable from other models. Specifically, the thesis demonstrates that the embedded discursive institutions that legitimate relations between banking and the national economy, forms of financial regulation and legal provisions in the Chinese context also legitimate a particular form of corporate governance in Chinese banking organizations. In terms of paradigm, the thesis shows how the legitimacy discourse is manifested in the competing paradigmatic shareholder and stakeholder models which are combined and integrated in the Chinese context. At the frame level, the present study elaborates on the key practical discourses in bank corporate governance in China - the board of directors, regulation of executive pay, risk management, and legal obligations, and finds that they are broadly consistent with the distinctive national discourses of the legitimacy and paradigm. For instance, implicated by the enhanced shareholder model and the stakeholder model, the bank board is oriented towards sustainable profitability to the shareholders, active support for economic development, and balance of interests of various stakeholders. The composition of the bank executive pay and specific regulatory measures, on the other hand, reveals the influence of close financial regulation and the state as the controlling shareholder in Chinese context. In risk management, echoing the paradigm of the stakeholder theory, Chinese banks have moderate risk appetites and concentrate on long-term profitability, real economic investment and sustainable development, which also represents the concerns for the financial stability by the regulators and their close supervision of the banks. For legal duties, which include the compliance duty and the fiduciary duty, the manifestation of a strong financial regulation is present, typically exemplified in shaping various standards and qualifications of legal duties.