System Of Private Banks: The Financial Sector Innovation

With China entering into WTO, the foreign-capital banks have gradually entered domestic financial market. The most typical example is " NanjingENC Incident" . Therefore, with the increasingly international competition, the reform of the state-owned banks is naturally in progress: However, because of the history, the pace for reforms in the state-owned banks is very slow. Meanwhile, though the small and medium-sized enterprises play very important roles in Chinese economy, it is very difficult to secure financing them, which leads to many illegal underground financial activities even if forbidden.Confronting with severe situation, opening civilian banks, as the institutional innovation in financial industry, is essential.The views mentioned above are just what the paper discusses.The paper consists of four chapters. Chapter 1 stresses the institutional advantage of civilian bank on the basis of the definition of it. Chapter 2 discusses the necessity of opening the civilian banks from three angles. The first angle is the financing of small and medium-sized enterprises, the second one is the reform of state-owned bank, the third one is the entering of foreign-capital banks. Chapter 3 analyzes the feasibility of opening the civilian banks in two factors, one is the situation which has possessed, another is the restricted factor. Chapter 4 first absorbs the lessons of opening civilian banks from other countries in the world, and designs a good way of opening civilian banks.Opening civilian banks is a very strong policy topic .The study of it not only promotes Chinese finance institution reform, but also perfects the Chinese-feature financial theory.