Social Sciences in China (Chinese Edition)

No.11, 2017

Increased Obligations of Commercial Bank Shareholders: Institutional Construction

(Abstract)

Yang Song and Song Yilin

The fact that in financial practice the commercial banks’ shareholders stake on residual bank risk themselves is a sign of their increased obligations. These statutory obligations go further than traditional limitations, but this does not mean that they are unlimited; rather, they represent a special case of the limited obligations of such shareholders and the specialized nature of the increased obligations of actors in the commercial sector. The increase in such obligations is an internal requirement for banks’ conquest of inherent moral hazards and their selfredemption, as well as an institutional guarantee of national financial security. Existing legislative provisions in this area have weak efficacy, and both commercial banking law and company law can be amended to allow for the supplementation and amendment of the basic general system of company law through special laws relating to financial companies. Overall thinking behind the structuring of the increased obligations of commercial banking shareholders can follow the basic structure of conditions, implementation and results, with a focus on determination of such institutional content as agents, obligations, supervision and judicial review.