Factor Analysis Of The Efficiency Of China's Banks

The necessity of bank supervision is no doubt for the global capital market. The typical theories of financial supervision effectiveness include theory of public interest, theory of financial fragility ,law investor protection.The focus of supervision is how to improve the efficacy of the financial system.The Basle Committee on Banking Supervision has issued a set of documents for bank regulation , and most of the developed countries have made schedule for the prudent supervision. However , efficacy is difficult to measure ,so academic studies from different approaches get different conclusions on the efficacy of supervisory . One kind of ways to measure the effectiveness of financial supervision is comparison between costs and benefits of the supervision , but the method is not perfect . This article will analysis the efficiency from the regulation instituteThe reform of China's current supervision mode is carried out under the principle of the China's situations. Four factors affect the efficiency of China's banks since 1979, including macroeconomic environment, the financial infrastructure, the reform of system and the independence of the supervision.We select three index : M2/GDP, the rate of non-performing assets, and efficiency of finance resource distribution to test the development of China's financial supervision ,and have the Chow breakpoint test for the macroeconomic finance efficacy in China from 1979 to 2005. The conclusion shows China's supervision consistent with China's financial policy adjustments.The last part of the passage assesses the efficacy of the Chinese banking supervision and puts forward the suggestions about the improvement of the supervision efficiency.