Research On Market Structure And Performance Of China's Banking Industry

The China's banking industry has witnessed the process from the complete monopoly of People's Bank of China, the oligopoly of 4 major state-owned banks, to the current commercial reform of state-owned professional banks and the emergence of many joint-stock banks. Its market structure has kept evolving and the degree of competition has been greatly enhanced. But the poor performance generated from the long-time monopolized mechanism is a fact that we can never shun. Facing he challenge brought by the entrance of WTO and by both the internal and external opening of China's banking industry, it's necessary to explore he market structure and performance of this industry.This dissertation is a research on the banking market structure, the performance and the relationship between them in China. By using quantitative and qualitative methods, it makes suggestions on optimizing the banking market structure in order to improve the performance. This is important to the development of China's banking industry and economy.Firstly, the dissertation analyzes the market structure of China's banking industry empirically by market share, centralization ratio, HHI index, Lorenz curve, Gini radio, etc. It shows that the market structure of China's banking industry is a structure of oligopoly, but the degree of competition is improving. Till now, compared with joint-stock banks, the degree of monopoly of state-owned banks is still quite high.Secondly, after defining the connotation of performance of the banking industry, the dissertation made analysis on profit-making, liquidity and safety of the China's banking industry empirically. The result shows that for most of the figures reflecting the profit-making, liquidity and safety, joint-stock banks make greater performance than state-owned banks which hold a monopolistic position in the market. This fact is most obvious in the aspect of profit-making.Thirdly, the dissertation made further research on the relationship between the banking market structure and the performance in the perspective of industry organization. There is a deviation between market centralization ratio and performance of China's banking industry. It is because state-owned banks' super size is the result of planned system, not that of efficiency.Fourthly, much efforts should be made to set up the market structure with efficient competition. Each commercial bank can make some reforms such as mergers and acquisitions in accordance with its market position. By optimizing the market structure, the performance of China's banking industry can be greatly improved.