The Comparative Study On China And Laos Banking System

China and Laos are both socialism nations, they are landscape neighbor countries. at the same time both countries are installing socialist economy reforms, but the Laos reform is comparing to China backward. Since the opening reform in 1978, China has achieved a great result in economy and social reform. The Chinese financial system is being reformed too, the results are also excellent, thus gave China a rapid development.Laos is a landlocked country, it is one of the poorest countries in the world, the financial system is really backward. In 1988 the first reforms started, ten year later than China. The Laos economic reforms got many experiences from, so that it can accelerate the economic development steps, at the meantime Laos used this advantage to avoid all kind of mistakes. Thus the country can learn from China about the reform of financial system, compare China and Laos and find out all the problems in that Laos system and then look for the solutions of it, it really has a deep meaning for the republic of Laos. Through studying Chinese financial system and economic development, Laos created its own development way and financial system.The thesis introduces first the Chinese banking system beginning and the reform development, emphasizes the situation the banking system since the opening policy. the banking system reform started at the end of the year 1978, the year 1979 Sichuan initiated the economic reform, including the reform of the banking system, its main point is that the banks will give a Short-term equipments loan to old industrial enterprises, support the changes in the corporations technique, in order to increase the production of light industrial goods.From the beginning of 1979 to 1984, China recovered successively, established the Chinese agricultural bank, China bank, China constructionbank, China commercial and industrial bank and so many other national banks, first set up the commercial bank system, marking the beginning of Chinese second grade bank system, after that, China was progressively making perfect the financial laws, management of financial controls, market environment an so many other conditions that are needed to improve the banking system more efficient, at the same time speed up the internal bank policies reform, reinforce the mechanism of internal control, encourage the system, organization system and so on, reform the share system, finally, changed the Chinese people bank into China bank, the four biggest national commercial banks became China commercial bank corpus, meanwhile rapidly developed small or medium share system banks and foreign banks.In recent years, China tried hard to solve the dilemma of prevalently deficient capital reserve in the state-owned banks , to enhance the competing power of the state-owned banks and to better the assets quality.Secondly, the present thesis introduces the establishment and development of Laos bank system, which is based on the colonization banks. After Dec 2nd, 1975, the day which Laos had been set up, Laos began to implement the socialist reform and central government-oriented bank system. After the reforms and opening policy, Laos implemented polarized reforms and the national bank is the central bank, which is in charge of the national financial business and carries out the currency policies in order to realize the functions of the central bank. In 1990 and 1995, Laos successively publishes and revises < The banking law of Laos > which regulates the national bank's legal status and duties.Lao's state-owned banks derive from the national bank. By the end of 1999, there are four state-owned commercial banks, two joint venture banks and eight foreign-owned bank agencies. The main transaction of these state-owned commercial banks is to bring in the savings, to lend loans and thecapital resources come from the citizen savings and foreign investments. Due to the domestic weak economic basis and the impact of the Asian financial crisis, in general the development of banking in Laos is quite backward.On the basis of the analyses of China and Lao's bank systems, the present thesis comparatively contrasts two countries' central banks. Seen from the functions of the central bank, developing country has more requirements for stimulating the economic development than the developed country. China is a fast economically developing country while Laos is still an underdeveloped one. So similarities and differences coexist between them.After the detailed analysis and comparison, the present thesis puts forward for some advice and suggestions concerning how to draw lessons from China's bank system reforms. Firstly, it raises that Laos must be alert to some issues occurred in the process of China bank system reform such as the harmful capitals, the relationship between bank and enterprises, the separation of politics and enterprises, the risky behavior of lending loans to the state-owned enterprises and so on. If these problems are ignored, probably they will reappear in Laos. In the following part, the thesis will focus on some existing puzzles in Laos banking business such as the unhealthy capitals, low financial credit, the weakness of the legalized management, the capital reserve of the central bank and independence. Facing all these difficulties, the inspiration and enlightenment we can learn from China banking reforms is to strengthen the independence of the central bank, to better the operating system of the central bank, to make full use and employ all kinds of currency policy tools. Laos also must improve currency policy conducting system, carry forward reasonably the reforms inside the financial organization and foster the domestic talents. Last but not the least, Laos must also attach much importance on the rearrangements of financial orders and positively develop the Internet banking business.