Research On Chinese Banking Market Structure And Performance

Commercial bank is an important part of modern finance , also a great support for the whole national economy .According to the commitment China had mad at the entrance to WTO ,our finance opened fully since the end of 2006 ,which means the Chinese commercial banks have to compete with strong international banks as well as the domestic counterparts . The joint stock commercial banks are getting larger and stronger after years of development. So the banking market structure will change as the competition getting fierce. This thesis studies the market structure of China's banking industry under a changing macro financial environment, and the influence on market performance brought by changes of market structure. And finally we use a model to find the relationship between market structure and market performance.The thesis begins with the current research of market structure of China's banking industry. First of all, through the empirical analysis of market structure, using the absolute and relative market concentration index-----CRn and HHI, we determine the type of market structure of China's banking industry is oligopoly. Then, the market performance of China's banking industry is measured with a series of indexes and by applying factor analysis, which indicates market performance of China's banking industry is not satisfactory, especially the state-owned banks are obviously behind joint-stock banks .Based on the former two parts, the thesis discusses the relationship between market structure and market performance of China's banking industry and finds out that there is positive statistical relation between CRn and bank performance but no obvious statistical relationship between market shares and bank efficiency . However, the general efficiency of each bank is one of the important factors to determine the market performance. Meanwhile, it also indicates the reason that why the monopolization in China's banking industry doesn't result high return in profit as that in developed nations. A series of irrational market conducts of state-owned banks also lead to their unsatisfied market performance. According to the research results, the thesis suggests that the banking reform should emphasize on establishing an efficient market structure by resolving the problems of state-owned banks and introducing the competitive mechanism .This thesis combines the industrial organization theory with last data of Chinese banks to get a more pervasive and practical conclusion .Also with a long period of data resource, the changing tendency of market structure and performance are more obvious to describe.