Research On Development Of U.S. Community Banks In Competitive Environment And Its Reference To China

One of the major characteristics of the U.S. banking system is that it consists of a large number of community banks which are closely related to local communities. The multitudinous community banks, coexisted with large banks, have met the diverse needs of businesses of all kinds and sizes, and satisfied consumers with different needs and preferences, thus served the U.S. economy well. Based on the theory of financial intermediary, information economics, and theory of money & banking, by adopting the way of the combination of qualitative and quantitative analysis, comparison study and case study, the paper analyzed thoroughly the existence mechanism and comparative advantages of the U.S. community banks, revealed the internal relations between that kind of financial intermediary and the economic development, probed into the competitive ability and future development trend of community banks under the background of ongoing radical changes in financial industry, and excavated experiences of the development of U.S. community banks to be drawn on by China's banking system for reform in next period.Each kind of financial intermediaries has its own distinguishing features. Firstly, the paper analyzed the essential features of U.S. community banks. The research showed that community banks differentiated from other banking organizations in many respects, including that they have simple organizational structure, focus on providing relationship lending and personalized service, their asset transactions are more untransparent, and their offices are established outlyingly.Distinctive comparative advantages are the basis of the existing of every financial intermediary. The paper then thoroughly analyzed the comparative advantages, especially advantages on relationship lending of community banks. Proceeding from the view that financial transactions are information-based, the paper revealed that the competitive ability of community banks in engaging in relationship lending was originated from their advantages on links including collection, transfer and use of soft information, which as well was related to these banks' characteristics in organizational and ownership structure. The actual operation performance demonstrated that, through way of relationship lending, the community banks successfully controlled the risks.Financial intermediaries play important roles in economic operation and financial activities because of the functions they undertake. The paper further probed into the roles community banks played in U.S. financial system. It was found that, as far as facilitating the financial system to fully and efficiently exercise resource allocation function is concerned, the roles community banks plays included: on the one hand, they filled the vacancy of financial support to small borrowers left by large banks in financial system, on the other hand, they alleviated financial blank in underdeveloped areas caused by general financial institution's unreluctance to entering low-and-moderate income communities. Besides, as a regulation vehicle, community banks provided grass-roots bearers for the transmission of central bank's monetary policies.Financial intermediaries develop in the process of continuous changes happening in financial industry. The paper also discussed the challenges faced by U.S. community banks and their future prospects. To sum up, the significant changes happening in the operation environment of banking industry, such as financial deregulation and technology progress, intensified the competitive pressure facing community banks. However, based on the viewpoint of modern theory of financial intermediary, the author held that forces including deregulation couldn't change the importance and speciality of relationship lending thoroughly, it would still be necessary in coming years to rely on soft information to alleviate the information asymmetries in parts of credit transactions, so in the foreseeable future well-managed community banks could still be viable. Moreover, intensified competition would further drive different types of banks to appear to specialize in the way of serving customers.The practice of U.S. community banks can provide experiences for our country to draw on. Finally, the paper explored how to draw on the relevant experiences. From the perspective of financial function paradigm, the author put forward that the introduce of community banks could improve our country's financial structure marginally. Meanwhile, priorities should be given to direct institution entrance when pushing forward the originating of community banks in our country, and attention should be paid to keeping these banks independent and in perfect harmony with local communities. Yet, risk control would be an important task in the course of developing community banks in our country, and the key to control risks is to effectively implement internal control, set up perfect supervision system, and create favorable external environment.