Research Of The Structure Of Banking Market Making Effect Upon Economic Growth In China

Whether in the bank-based or market-based financial system, the role of banking institution is very important, especially for the developing countries. And banks have an effect upon a country or region's economic growth to a certain extent. The health of the banking system is closely related to the macro economic volatility of a country, and the soundness of the banking system can give full play to the effectiveness of monetary policy, reduce transaction costs and financial risks, and have a major impact on the healthy development of the macro economy of a country. Similarly, the structure of banking market can also affect a country's industrial development and macro economic growth. From a practical point of view, because of the differences between countries in the political, economic, cultural and other things, the situation of national banking market structure is very different, and therefore, the study of the structural differences of banking market impact on economic growth has a profound theoretical and practical significance.The study of structure of banking markets affecting economic growth in foreign countries start very early, but because the differences in assumption and interpretation, and metrics, data collection and other differences of structure of banking markets, so the conclusions are very different. So, the study of structure of banking markets affecting economic growth is inconclusive. While the study of concentration of banking markets in domestic start very late, and most papers are concentrated on the relationship between concentration of banking markets and performance of banks. However, either in breadth or in depth, the study of this topic can not Compared with abroad.With the deepening reform of China's banking sector in recent years, the degree of financial deepening is increasing, and the Banking Market Structure in China has changed dramatically. After measuring the banking market structure in China by a variety of methods, such as CRn index, the HII Index, the Lorenz curve and Gini coefficient, we find that market concentration of China's banking sector remains very high, and the leading position of four major state-owned commercial banks in the banking system is no fundamental change, its assets, deposits and share of loans remains high. However, on the other hand, China's banking market concentration is also has a declining trend with time.Different banking market structure can affect one country's macroeconomic from many mechanisms, such as credit rationing, interest rate mechanism, screening mechanism, the scale mechanism. The mechanism of different banking market structure affecting economic growth is also different. The competitive banking market structure can guarantee the stability of the banking system, reduce the cost of borrowing and help to promote the development of small and medium enterprises. But in the competitive banking market, issues of adverse selection and moral hazard are outstanding, and it is difficult to achieve economies of scale. Monopolistic structure of the banking market can achieve economies of scale and reduce the adverse selection and moral hazard. But monopoly will bring the loss of efficiency and other social costs, and it is not conducive to the health of banking system and economy in some respects.In this paper, we use market concentration index and GDP rate of change to reflect the market structure of banking and economic growth, and use 20 years of data from 1989 to 2008. The empirical study illustrates that there is low negative correlation between banking market concentration and economic growth, and the representation of assets and loans are more apparent. This shows that Concentration of China's banking sector is negatively correlated with economic growth, and the reason is the leading position of four major state-owned commercial banks and the deviation of the Ownership of state-owned commercial banks.Current banking market structure in China compared to desirable banking market structure is still imperfect. Construction of banking market structure in China should agree to follow a basic principle, which is to be compatible with the national economic structure, and start from market players and market environment.