Chinese Banking Market Structure Optimization Problem

China'S CBRC decided to use prudence on developing private bank in 2006. But it is the key of optimizing China's banks market structure that developing private banks in the writer's opinion. Based on reviewing industrial organization theory, five factors were summarized: market concentration ratio, economies of scale, product difference, entrance barriers and exit barriers. The dissertation proves it that developing private bank is the key of optimizing China'S banks market structure from the five aspects. The importance of the topic, relating research data, the innovation and the logic structure are illustrated in the instruction.Indirect financing is the main channel in developing China. , banks is important in resources allocation. Banks market structure irrationality lowers the efficiency of saving transforming into investment, can not meet with the demand of enterprise and farmer's financing, so it impedes economic growth; high monopoly bank market structure magnifies the faulty of money policy-conduction system. The resources focus in megapolises, big enterprise and developed areas; the resources of small enterprise, small cities and developing areas is rare. So the employment position is limited, the improvement of the people'living level is slowly. High monopoly banks market structure restrict banks corporation-governance reform, enlarging the faulty of"one stock dominance''of state-owned banks. So the issue of optimizing banks market structure is pressuring in Chinese reform.The first chapter reviewed theory tool. Industrial organization theory could be classified into three schools: Harvard School aiming at competing market structure, market structure decide market behavior and then market performance; Chicago school and New-Australia school aiming at efficiency, efficiency decided behavior, behavior influences structure. The difference between them is that: the base of Chicago school is New-classical price theory, while the base of New- Australia school is logic analysis of individual behavior. New-industrial organization theory aims at corporation behavior. New–industrial organization theory focus on corporations behavior, introduce enterprise interior behavior into industrial organization research area using transaction costs. Efficiency ism and new-industrial organization illustrate market structure as endogenesis factor, while structure ism illustrate market as exogenous. After evaluating three schools, the writer concludes that five factors influence market structure, which are market concentration ratio, scale of economy, product difference and high social entrance barriers and exit barriers, using them as analysis frame.The second chapter discusses the influence of market concentration ratio on market structure. First the indexes are choosed: market concentration ratio and HHI index. Then China's banks market structure are estimated by the two indexes. Besides the market, the motivation of risk elusion, the phase of economic development and the development strategy have influence on market structure. High monopoly market structure lowers interest rate of deposit but heighten interest rate of loan. High market concentration harms economic development, it is necessary to lower it. The way is not splitting big banks, but improving small banks shares.The third chapter discusses the influence of bank economy of scale on market structure. After illustrating bank's economy of scale, the reasons of bank economy of scale and its tendency are obvious. Comparing the performance of state-owned bank reform, get the conclusion:the reason of state-owned bank inefficiency is that the ownership belongs to state.The fourth chapter research bank product difference how to influence market structure. After economics analysis of product difference, enterprise different strategy and the relation between product difference and mixed operation. The developed countries product difference are price difference, new product and service difference. The reason of lack of product difference is too high monopoly and lack of competition.The fifth chapter discusses high social barriers of Entrance how to influence market structure. First reviewing three school opinion about barriers of Entrance. The main barrier is administrative barriers, and administrative barriers substitute for economic barriers in China. So the efficiency is lowered. Russia and Poland reform during transition period give us good lessons. There are many conditions to lower high social barriers: regulation, laws and steady macro-economy.The sixth chapter discusses how bank barriers of exit influence bank market structure. Banks exit has large externality. The reason of bad bank performance is that there is no exit in bank market, so there is no strict restrict mechanism. If bank efficiency is improved, bank exit channel should be expedite.The seventh chapter gives the ways of optimizing Chinese bank market structure: the development of private bank is the key of optimizing Chinese bank market structure. The tradition hypothesis cannot illustrate the relationship between China banks market structure and market performance. After testifying state-owned bank efficiency low, it is spontaneous to develop private bank. The writer briefly illustrates the policy barriers to private bank and the argument about private bank. Argue against the ideas which oppose privacy bank. The writer illustrated the difference between private capital buy the stocks of bank and new private bank development .Given the licence amount is fixed, the licence should be flowed, from low efficiency bank to high efficient banks or new banks.The dissertation focus on market structure, using industrial organization theory proves that the key of optimizing China bank market is developing private banks.