| Financial stability lies in the stability of the banking industry, which is a fundamentalconclusion drawn from the research of finance in the20th century. Inspection of financehistory reveals that although the banking industry is not the break-out of financial crises butthe monetary market, the foreign exchange market, or the stock market, the damage by thebanking crisis is the most severe. China’s financial system is typical of bank-based, so thestability of the banking industry is more important to sustain financial stability in China.The global financial crisis triggered by Sub-Prime crisis in the United States in2007,which changed American’s financial structure drastically, and may even will affect thechanges of the world financial architecture. At the same time, American style financial modelwas oppugned. The financial stability has been the focus of the world. Almost nationalfinancial authorities have begun to issue financial stability-related data and policyinterpretation, and early warning of instability timely, involved the US government. Currently,the theoretical problem of the financial stability is of the cutting-edge issues in finance.With the reform of financial system and establishment of the joint-stock commercialbanks, the four major state-owned commercial banks market share continue to decline, themonopoly position has weakened. The structure of Chinese banking industry has becomingfrom monopoly to competition. In the previous financial crisis, our country maintained astrong shock resistance ability, which makes the development of our economy continuous.But at the same time, we should also be aware of the default of our financial system.Nowadays, China’s financial industry opening degree is very low, interest rate and exchangerate are regulated by government, and the development of financial market is not perfect.How to adjust the structure of banking industry to maintain the stability of the economydevelopment is of great significance. This paper analyses the market structure of bankingindustry and financial stability, and the relationship between them, in order to provide acertain reference for the next step reform of our financial system. |
