The Impact of Ownership Structure on the Performance of Rural Commercial Banks Based on Random Effect Variable Intercept Model

The ownership structure plays a vital role in the development of rural commercial banks. This paper selects the largest shareholder’s shareholding ratio and the degree of equity balance as explanatory variables, chooses the cost-to-income ratio as the bank’s performance proxy variable, and uses the logarithm of total assets, non-performing loan ratio and capital adequacy ratio as control variables. This paper collates the panel data of 13 rural commercial banks in China from 2013 to 2020, uses Stata software to conduct unit root test and cointegration test for each variable, and determines the applicability of the mixed cross-section model and the random effects model. Finally, the random effect variable intercept model is used to empirically study the impact of the ownership structure on the performance of rural commercial banks. The empirical results show that the shareholding ratio of the largest shareholder has a significant negative impact on the cost-to-income ratio; the degree of equity checks and balances has a significant negative impact on the cost-to-income ratio; when the equity ownership is state-owned, it has a significant negative impact on the cost-to-income ratio.