Bank Fragility, Warning System And Control Countermeasure In China

Because China is a special economy transition country, there are many institution mechanism obstacles in management and devolvement of commercial banks. The commercial bank risks are magnified and our bank fragility is pricked up. After entrance WTO, facing pressure from economy and financial globalization and external impacts, there is possible for a bank crisis breaking out in our country.Therefore, research on our commercial bank fragility, warning system and control countermeasures is very practical, for it helps to establish adequate capital, rigorous internal control, safe management, good service and performance and international competitive modern financial corporations, promote economy and financial reforms and realize economy continuance development.Firstly, we define the definition of bank fragility and review the researches on bank fragility from macrocosmic and microcosmic aspects. Secondly, we describe the collective estimate of our commercial bank fragility and main representations—overmuch bad assets, inadequate capital, low payoff and weak competitive ability. After that, we discuss the deep-seated mechanism of our bank fragility. We think our bank fragility is from the faultiness of internal and external mechanism of our banks. Moreover, our banks bear the cost of economy transition. Thirdly, based on foreign bank warning system– CAMEL system and Prompt Correct Model and our practice, we adopt KLR signal analysis to shape our warning system, and we demonstrate China Construction Bank and Bank of China. Finally, we countermeasure the commercial bank fragility in our country through quickening property right reform, establishing scientific corporation control structure, molding a nous development model under capital restriction, stepwise deregulation and full-scale management, establishing multilayer capital market, perfecting institution and improving financial zoology and perfecting financial regulation.