| Since 1980s, finance industry has developed rapidly. But financial crises broke out frequently, along with the evolvement of financial liberalization and globalization. And these crises have different characters from the past. Financial fragility was created to describe this phenomenon. The feature of high leverage of financial industry determines that the fragility is the nature of the financial industry. When the fragility is too heaven for the financial industry to endure, or the financial industry is shocked fiercely by the exterior factor, financial crisis will break out. In the meantime, the reform of Chinese finance system is being in the pivotal stage, and more and more problems have been exposed, especially in banking industry, such as, a series of risky events, a great deal of non-performed loans, low capital ratio, low capacity of management and high concentration risk.Due to the, strict industry separation rules, the fluctuation of financial market is little relevant to financial fragility of banking system in China. And the problem of our financial system is necessary relative to the reform of economy system. The current high-concentrated financial system make banking system more and more fragile, but any change to this system is so difficult. The aim of this thesis is to explain how this state was formed and evolved based on the analysis of government behavior selection under the background of institution migration.We can discover that the government behavior is the main reason why Chinese banking fragility haven't led to bank crisis through the analysis, such as high growth speed of economy, high saving ratio, strict finance regulation and recessive assurance of government, etc. The strong control of resource by government coupled with low level of finance liberation make the banking system reach to unstable equilibrium in the lower lever. Furthermore, some kinds of institutional factor, such as relation-dominated financing system, improper supervision and excessive interference of government, make banking fragility heavier.Through examining the forming and cumulating process from the viewpoint of statement utility function, we can find that, the state control institution is the foundation of banking fragility in China. On one hand, it can use the strong capacity in recourse allocation to keep the financial system stable, on the other hand, it prick up the financial fragility due to the low efficiency. The government select maintain strong control for thefinance stability instead of efficiency. But in the long run, this kind of selection will be obstacle of economy growth. To restrain the state control, we have two choices, one is property right reform and another is speeding up liberalization process. Two model analysis reaches a conclusion that, the liberalization process should be followed more basic institutional reform. So, property right reform is the only way to deal with non-performed assets rapidly and also the groundwork of further finance liberalization. Reform following such an arrangement can alleviate Chinese banking fragility. |
