Entrepreneurship, professional managers and the development of modern Chinese banks

Compared with other Western institutions, the modern banking system was adopted by the Chinese quite late. Only four decades after its appearance, however, modern Chinese banks emerged and managed to develop into viable and self-sustaining institutions.;Following a narrative history of modern Chinese banking, this thesis first shows that the rapid development of modern Chinese banking during the first four decades of the twentieth century mainly resulted from the expansion of a group of private banks, which controlled most of the capital resources available in the Chinese financial market. The predominant view of existing scholarship argued that the development of modern banks resulted from their close relationship with the central government which allowed these banks to earn massive profits from speculation on government bonds. Examining nine important banks of the period, the author challenges this opinion and demonstrates that government debts actually undermined, rather than promoted, the healthy development of the modern banking industry. The reasons for the success of the banks should therefore be sought elsewhere.;This thesis focuses on one of the most pivotal factors leading to the development of modern banks: the banks themselves. Integrating western banking practices with Chinese indigenous management methods in response to changing financial markets, Chinese banks greatly enhanced their power and increased their leverage in the Chinese financial market.;Operating in similar business and financial environments, why did some banks succeed and others not? The author argues that the principal factor which led to these differing fates should be attributed to a group of "entrepreneurs with Chinese characteristics" who were wrongly labeled as China's "robber barons" by many scholars. Working as professional managers in their banks, these people combined the traits of Western entrepreneurship with indigenous Chinese business ethics and Chinese nationalism in running their businesses, successfully competed with indigenous financial institutions and foreign banks in China, and contributed the most to the development of modern Chinese banks.