Bank Concentration,Bank Monoplistic Conduct And Bank Performance

As the marketization reform of China's banking industry continues to deepen,encouraging more bank entities to enter the market and strengthening market competition have become policy directions.Against this policy background,the concentration of China's banking industry has continued to decline in recent years.So,how does the decline in bank concentration affect bank market competition and bank performance? The "structure-conduct-performance" hypothesis of industrial economics holds that if the industry concentration rises,then the leading companies in the industry will adopt monopolistic conduct to obtain excessive profits,which will reduce the efficiency of resource allocation and have an external uneconomic impact on society.This article aims to test the applicability of this hypothesis in China's banking industry,and its research is of great practical significance to provide policy recommendations for bank regulatory authorities.Based on the "structure-conduct-performance" hypothesis,this article explores how bank concentration affects bank performance by affecting bank monopoly conduct.On this basis,this paper also analyzes the adjustment effect of the interest rate marketization process and the introduction of the deposit insurance system on the "structure-conduct-performance" transmission mechanism.In this paper,the panel data of 115 domestic commercial banks from 2010 to 2018 is selected as a sample for empirical research.The empirical results show that the reduction in the concentration of China's banking industry can weaken the degree of monoplistic conduct of banks,thereby reducing the excess performance of banks.Further analysis also found that the process of interest rate marketization can intensify competition in the banking market,thereby weakening the "structure-conduct-performance" transmission mechanism,and the introduction of the deposit insurance system has produced the opposite effect by strengthening the competitive advantages of large banks.Based on the above results,this paper believes that the market-oriented reform policy of China's banking industry is worthy of further encouraging and deepening.The authorities of banking regulatory should relax the entry threshold for the banking market and guide more small and medium-sized banks into the banking market to reduce bank concentration.At the same time,they should steadily and orderly advance the process of interest rate marketization and complete the final "interest rate integration" task.And take measures to improve the current deposit insurance system,such as the establishment of transitional banks,aimed at alleviating the public's excessive concerns about small and medium-sized banks.