Research On The Relationship Between Market Structure And Stability In Our Country's Banking Industry

The financial industry will face more drastic competition after it opens to the outside all around. The finance is the centre link of economic activity, as such important industrial sector, the stability and prosperity of banking industry has a direct impact on the development of the whole national economy. Due to the particularity on the process of form and development of China's banking industry, there are still has the problem of higher concentration and lower efficiency which has weaken the bank competition tremendously, so it is very necessary to reform.International research experience shows that the banking market structure and the stability of the banking system have a close relationship. But as the correlation is positive or negative, the academic community has so far no consensus conclusions. Analysis of the changes in Chinese banking market structure and the stability of the banking sector, and to explore the relationship between the two, has some practical significance for the regulatory authorities to take measures to maintain the stability of the banking system at the macro levelThis paper are guided by the industry organization theory and bank crisis theory, used mixed methods, with comparison and induction, to research on the market structure, the stability, and the relationship between them of China's commercial banking industry. Firstly, it starts from the market structure through empirical analysis by using several indices, drawing the conclusion that the market structure is at a low type of oligopoly stage and in the process of going to monopolistic competition stage. Secondly, we use the comprehensive index study to analyze the condition of the stability of the banking system, and analysis of the causes of the situation; thirdly, use a econometric model to analysis the relationship between the banking market structure and stability, obtained the conclusion that China's concentrated market structure is conducive to stability of the banking system. Finally, proposed the recommendations to improve the China's banking structure under the premise of bank stability.This final conclusion is that in the long run, their has a complementary relationship.Between the bank stability and bank performance, the increase of bank performance will fundamentally improve the stability of the banking system. So we suggest that the destination of reform is to transform administrational monopoly to economic concentration. We emphasize on establishing the efficient market structure by introducing the competitive mechanism. At last, we put forward some proposals including deepening the reform of property right system and organization structure of state-owned commercial banks, developing the small banks, driving the innovation of financial products and loosening strict controls and so on.