A Study On The Market Structure Of China's Banking Industry

Since China's financial reform beginning in 1994, especially after China's accession to WTO in 2001, China has witnessed tremendous changes in the banking industry. The market structure which had been monopolized by the state-owned banks has been gradually changing to the competitive market structure in which the state-owned banks dominates, the modern joint-stock commercial banks, city commercial banks and postal savings banks, rural credit cooperatives and foreign bank branches co-exist.This thesis selects data of 23 banks in China in the period 2003 to 2008 as the research sample, and make empirical research in the concentration of China banking with the CRn and HHI Index. The results show that the concentration of loan scale is lower than the concentration of other projects in general, and the concentration of loan scale index declines by the largest margin and percentage points in the sample period, while the medium-sized banks ranking from the fifth to the eighth place develop rapidly increase,their market shares in each index increase significantly.At the same time, this thesis makes research in competition degree of China banking during the period 2003 to 2008 with P-R Model . Firstly, the empirical research in competition in each year shows that although the level of competition in China banking during the period 2003 to 2008 decreased in some years, but generally showed an increasing tendency year by year. Secondly, by dividing four major state-owned banks and other remained banks into two parts to judge the level of competition, it finds the four major state-owned banks have significantly lower level of competition than other remained banks.Finally, by calculating concentration and competition index correlation coefficient , it shows from 2003 to 2008, based on asset size, deposit size and loan size , market concentration and competition are clear indicators of a negative relationship—the lower bank concentration with the higher the degree of competition, which is consistent with the traditional conclusion.