Research Of Commercial Banks' Reform In China Under Dual Soft Budget Constraint

This dissertation is a theoretical economic study on the optimal path of the reform, and the future way to reform in China's commercial banks. As a basic theatrical frame, the soft budget constraint theory is introduced into this dissertation. The term'soft budget constraint', introduced by Kornai(1980), has become a familiar part of the economics lexicon. Originally the concept of SBC was focused to the problems in the socialism economy or economic transiting from socialism to capitalism, but now the concept is increasingly acknowledged to be pertinent well beyond the realm. A host of capitalist phenomena, such as the collapse of the banking sector of East Asia economies in the 1990's.A large formal literature on soft budget constraints has developed, much of it evolving from Dewatripont and Maskin (1995). Several partial surveys of this literature have been produced (Maskin, 1996; Dewatripont, Maskin and Roland, 2000; Maskin, 1999; Maskin and Xu, 2001; Mitchell, 2000). There is also a significant body of work that employs models quite different from the Dewatripont-Maskin variety. The analysis of this dissertation is on the base of such development of SBC theory as above.In Chapter 1, the fundamental concept of SBC, the Behavioral Effects and the motivation are clarified, and relevant is reviewed.In Chapter 2, the traditional theory on the reform of China's commercial banks is reviewed, which contains the theory of reform of property rights and the theory of market structure reform. To amended the limitation of the two ideas, I use the SBC theory to bring the two limitation theories into the same frame, and then the theory system has been built.In Chapter 3, the paper analyzes the station of dual soft budget constraint; on one hand, the government inject new capital to the bad commercial banks, or erase the non-performing loan; on the other hand, the commercial banks have soft constraint to the loan, which bring much more non-performing loans.In Chapter 4, The D-M model and concept of EX-post Efficiency. D-M model comprises two periods, a center that serves as a source of financing, and a set of enterprises, each headed by a manager, that require funding to undertake projects. The inconsistency between these ex ante and ex post criteria is at the heart of the SBC syndrome viewed as a dynamic commitment problem.In Chapter 5, BEG model is set to analyze the behavior of bank, entrepreneur and government, under dual soft budget constraint. And the conclusions are as follows: first, the reform of property rights can not perfect the commercial banks'performance without further market structure reform; second, the station of macro economy affect the ability of commercial banks to eliminate the non-performing loan on one side, and on the other side, it stimulate the entrepreneur to hitchhike, which will aggravate the soft budget constraint.In summary, this study shows that the performance of China's commercial banks not only depend on the reform of property rights, but also on the reform of the market structure. At the same time, the macro economy can only affect the performance of China's commercial banks, the success of the reform of China's commercial banks is subject to the institutional transformation.