Analysis Of Chinese Banking In Structure Conduct And Performance Based On The SCP Paradigm

Banking is the heart of the country's financial system and the national economy. It has close contact with the various departments. Since the reform and opening up of 1978 , the discussion on Chinese banking industry structure, conduct and performance had not been stopped. The analytical methods and analytical point of view the problem is not the same. As the core of the theory of industrial organization, SCP paradigm established the causal relationship between market structure, conduct and the performance, so that the discussion of the three can be carried out along a clear thread. Although after repeated criticism and correction, it is still the main theoretical paradigm to analyze the problem of industrial organization. In the same time our unique ownership structure, Interaction between market structure, conduct and market performance, the new information economics and game theory were combined with SCP theoretical framework, so that the analysis of the article can be completed.The study found that China's commercial banks have some problems as following: Cost rates have been increasing from 2004 to 2007. The return on capital has improved, but mainly in deposit and loan spreads , intermediary business is in low level.; despite constant listing and reorganization, structure of property rights is still not clear, commercial banks are still not true market players; a serious shortage of financial innovation and homogenization troubled these banks, product differentiation is still small; free entry and exit is very difficult; the market at a relatively low level of oligopolies, administrative inefficiency led four state-owned commercial banks to have the great market, but don't have the good performance, the vicious competitions show in some aspects. The main reasons for the above problems is the state capital still occupy the dominant position of commercial banks; controls of interest rate, and sub-operators led commercial banks to innovate weakly, the products reflected the homogenization; banks-control is only by the principles of the laws and regulations, there is no deposit protection system and the market out of laws and regulations. Therefore, s if China's commercial banks want to become the true market enterprise, we must actively introduce private capital into commercial banks, state-owned capital gradually quit from the industry, commercial banks play down the political overtones, contributed to changes in ownership structure; it must actively promote market-oriented reform of interest rates, relaxation of separate operation and gradually transformed into universal banking model to enhance the bank's level of innovation; and construction of market-oriented system of deposit protection and freedom of exit mechanism is also necessary; at last, regulators must pay attention to preventing the emergence of vicious competition when they relax the regulation.According to the theory of industrial organization, the article is divided into six chapters on the issues discussed based on market structure, conduct and market performance.