Practical Study On Relationship Between Bank Market Structure And Performance In Transition Economy

There are a lot of oversea papers that do researches on bank market structure, relationship between bank market structure and bank performance. Most papers found that market focus degree or bank efficiency would affect bank performance positively. So four hypotheses were conducted, including: market-conduct-performance hypothesis, relative-market-power hypothesis, X-efficient structure hypothesis and scale-efficient structure hypothesis. And Property RightBut in China we are lack of research on relationship between bank market structure and bank performance. Most practical research used data before 2000, and got conclusions that four hypotheses are not proper in Chinese bank industry. The paper used data from 1996 to 2003, DEA to build bank efficiency model and based on Berger (1995) model to make practical research on relationship among bank market structure and property right and bank performance, and got the conclusion that market-conduct-performance hypothesis is not entirely negative in Chinese bank industry.In practical reach of bank market structure, the result is it is very high concentration ratio of bank market structure, but the concentration degree is falling. Through efficiency model, we found stated banks had lower efficiency, and other commercial banks had higher efficiency. The big scale did not bring good performance to stated banks. Based on Berger model, we got only conclusion of market-conduct-performance hypothesis was proper in Chinese bank industry. Stated property right and big share effect bank performance negatively, but X-efficiency effects bank performance positively.The reason of lower bank efficiency in Chinese bank industry is that the monopolization of stated banks and the dominant stated property right. So in order to improve bank efficiency and performance in Chinese bank industry, we should reform bank market structure and bank property right, break the monopolization and stated property right.