The Research On Developing Community Banks In China

As an important integrant of financial institution systems, China's bankingtakes an important task in financial support of the national economy. The total assetsof banking are 78 percent among the whole financial business, so it is the leadingposition. But China's banking structure is unreasonable. Small banks are 99 percent inthe amount of bank organizations, but only 13 percent in the total amount of deposits,and these small bank organizations have a historic burden and it is hard to manage.Because of this, it is limited in supporting small and medium-sized enterprises(SMEs) and the economy in county area. The four national commercial banks ownthe amount of deposits of 70 percent among all the banks, though they are only 0.01percent in the amount of organizations. These big banks seldom, even are not willingto pay their attention to SMEs in view of their benefit and cost. In addition, Chinaattended WTO five years ago, and 5-year transitional period has passed, during theperiod we promised to open our financial business. According to "Financial ServiceAgreement", China opened the banking market at the end of 2006 and canceled allkinds of limitations in ownership and forms of management and setting up. Ourcountry will no longer have concealed insurance for commercial banks. Undoubtedly,the entering of foreign capital banks will bring unprecedented competition pressure toour four national commercial banks and other joint-stock commercial banks. In orderto improve their own ability in competitions, some big banks will adjust their ownbusiness strategies. On one hand, they will orientate their serving objects to "big cities,big enterprises and big industries." However, China's SMEs have become importantpowers in the national economy and development of society through 20 years'development. They have contributed a lot to increasing taxes, providing job positionsand coordinating the development of national economy. The shortage of depositresources for small banks and marketing orientation and coordination of strategy forbig banks will surely weaken financial support to the economy in county areas andSMES. This is a terrible disadvantage to developing the national economy healthily,constantly and steadily. There are certain relativities between bank systems and economic development. It can even be said that there will not be healthilydevelopment in economy without a relative reasonable bank system structure. So weshould pay more attention to the issue about reasonable bank system structure in theprocess of economic development, and optimize in the proportion of big, medium andsmall banks according to practical conditions so that we will increase the efficiency offinancial resources allocation for banking. In some foreign countries, somecommunity banks, which belong to medium or small commercial banks, are playingan important role in the efficiency of financial resource allocation and thedevelopment of many SMEs. In order to improve bank structure; to increase theefficiency of financial resource allocation; to release the situation in which it isdifficult for those SMEs to finance, it will be a good choice to develop communitybanks in our country. The purpose of this article is to give several issues about how todevelop community banks in our country. These issues should be paid attention andthey are based on the low efficiency of our present bank systems and the presentsituation for SMEs financing with difficulties. Therefore, this article will offer somevaluable reference in the practice of developing our community banks and in thefinancial support that banks will give to the national economy.Firstly, beginning with the confirmation of notion and the analysis of features,this article introduced the standard between foreign community banks and that theinternal scholars divided, and gave a definition for Chinese typical community banksand gave an analysis to the features of community bank and the position in economicdevelopment based on comparative analysis. Secondly, by analyzing operating ofcommunity banks abroad, this article tried to find some beneficial experience for thedevelopment of China's community banks. After that, in view of our financial ecologyand the low efficiency in China's banking, the article showed the necessity ofdeveloping community banks in our country, and analyzed the possibility ofdeveloping community banks in China. Then the article analyzed some obstacles anddifficulties about developing community banks in our country. At last, based on theabove analysis, the article put forward some strategies about how to promote ourcommunity banks. That is "to improve community banks' institutional arrangement; to standardize community banks' systems styles; to speed up the construction ofhuman resources; to strengthen the risk management of community banks; to speed upthe informationization construction of community banks; to enhance cooperation ofthe same trades, banks and enterprises so that widen their business; to developcommunity banks' enterprise culture."...