Research On Zhejiang's Advantages Of Developing Private Banks And Institution Designing

One of the greatest achievements of China's economic reform is realizing the development of the private economy to promote the rapid development of economy. However, the private economy which makes a significant contribution to China's economic boom is currently facing a dilemma, that is, on one hand, the development of the private economy accumulates lots of idle capital in the urgent need of investing; On the other hand, many small-middle enterprises (SMEs) are facing financing problems, lacking support from the financial institutions, particularly banks. Faced with this dilemma, domestic experts and scholars are apt to take the development of private banks as an important solution to the problem in order to dredge the channel between the civilian capital and the SMEs' financing demand to achieve a sustained and healthy development.After 10 years of discussions, the viewpoint of developing private banks has been basically come to a consensus. However, most of these discussions focus on the national scope rather than specify to a certain area. The paper narrows the scope to Zhejiang, and draws a conclusion that Zhejiang should give a special priority to the development of private banks by analyzing the special conditions of Zhejiang. Furthermore it designs the system of private bank from the perspectives of both internal and external.Firstly, the paper defines the concept of private bank on basis of interpreting the unbalanced-developing theory, the SMEs-fmancing theory, the property rights theory, the transaction costs and agency costs theory and the system innovation theoiy. The private bank is the kind of enterprise that is controlled by private capital, and absorbs savings, provides loans, and handles settlement for the enterprises according to market principles. The essence of the private bank is that it is a system innovation of China's financial system outside the state-owned banks system. Meanwhile, the author summarizes five characteristics of private banks as follows: property...