System Change Theory-And Discussion On Chinese Banking Competition

For years, the problem of tremendous non-performing loans existing in Chinese banking sector extraordinarily caught the eyes of specialists in economics, finance and so forth. According to official estimates, even after a large amount of loans were taken off bank books, non-performing loans in the first three quarters of 2007 wereï¿¥1061.00 billion,ï¿¥1087.51 billion andï¿¥1079.82 billion respectively, or about 8.20%, 8.14% and 7.83% of total loans. These figures could be much higher if fully adjusted to reflect international definitions for non-performing loans. For example, the Bank of China's 1999 non-performing loans were found to be 2.6 times as high using international criteria as they were using the traditional Chinese definitions. But we have to admit that they are going well, which can be observed from the situation of the past few years. On the other hand, the Chinese financial system is increasing very fast especially in recent years. The growth rates of bank domestic credit is at average 20% a year and nearly twice the growth rates of GDP, which shows up to some certain extent the prominent status of Chinese banking sector with the development of Chinese economy. It is not only in relative terms as percentage of GDP but also in absolute terms as gross financial capital accumulation, though the stock and bond market is nothing more than a blessed event slackening its gait not long ago. Therefore, how to correctly deal with this severe problem faced by the Chinese banking sector at present will have the direct relationships with the future healthful, continuative and fast development of Chinese economy. Hereby, two questions should be thought about deeply: one is how to understand these non-performing loans and their causes of formation properly, The other is what operating system is the real need by the Chinese banking sector in future, especially when it must confront the competition with the foreign banks.Following these two matter things, for a given goal function, I separate my research into three parts: the essence of system, competition and the status quo of Chinese banking system competition. Specifically, the whole research could be delineated as,Chapter 1, introduction.Chapter 2, the framework of system theory, which is based on the coordination amongst the participants, the behavioral motive and the opportunity returns. Chapter 3, explanation for bank development in the view of system reform, which is based on the empirical research on American case, French case and Southeast Asian financial crisis.Chapter 4, system transition theory, which could be depicted as: system change is the intrinsic feature of a system, and it is different from system transition. System reform does not belong to each of the stage of system change. It is just a move to alter the direction of system change. Moreover, system competition as the necessary condition of system transition makes the initial system realize relevant continuity.Chapter 5, Chinese banking system reform, which is to indicate the situation of Chinese Banking Institutions and the experiences of Chinese Banking Reform.Chapter 6, the performance of Chinese banking system reform. In this section, I dwelt much on the Chinese banking system reform in order to systematically test the propositions I proponed in the aforementioned analysis. Meanwhile, some suggestions on the future direction of Chinese banking system are given.Chapter 7, conclusions and prospects.