The Research On Efficiency Of Banking Industry Of China

The banking industry play a unique role in the economy through allocating capital funds to finance productive investment,providing a payment system and transforming risks and influencing the development of the real economy. Owing to the mutual relationship between the banks with the other industries, it's useful to research the banks from the aspection of industry organization theory and to enhance the efficiency of the banking industry.This paper use the theory of industry organization to search for the factors that influence the efficiency of banking and put forward the suggestions for the public policy according to the research in order to enhance the efficiency. According to the industry economics, only the banking sector match with other industry structure that the economic of china can sustain strong growth. At present, however, the situation of our country is contrary with the requirement. So this situation impedes the development of banking and also reduces the social benefits.Based on the theory of industry organization, both of the SCP framework of the Howard School and the thoughts of Chicago School are admitted that performance is related with the structure and conduct. We can analyze their relationship from two points: From the short term, the structure of the overall banking industry is stable and each bank keeps the daily operation under the market structure. Now, the performance of each bank is decided by the conduct of the bank, and the bank conduct is influenced by the X-efficiency. From the long term, the market structure of the overall baking sector is adjusting with the change of the conduct and performance of the banks.The factors influencing the banking efficiency can be divided to scale economy,scope economy,X-efficiency and the technology factor . The banking industry was brought into the research area of the industry organization from 1960s. At the beginning, the economist of industry organization mainly pay attention to research the scale economy and scope economy of the banking sector aiming to find the methods of banks to enhance their efficiency in short of financial resource. In the 1970s, with the appearance of financial innovation, the economist focuses the research on which the bank should keep separate operation or mixed operation. After the end of 1980s, with the emerging of merge and acquisition of banks, the banking sector is confronted with many unprecedented challenges. So the research area about the banking performance is expanding to the X-efficiency.With development of the of socialist market economy, the market structure of china banking sector is better than before. However, the assets of the main commercial banks occupy 50 percent of the overall banking industry. On the other hand, the concentration ratio of the big four state-owned banks is 50%. According the theory of Beem, it's obvious that the structure of the banking industry of our country is monopolized. What's more, the efficiency of banking industry is low in facilitating allocation of financial. There are many unused funds in the bank, however, many medium-sized corporations face the problem that they can't borrow money from the banks.There are four reasons that lead to the banking industry low-efficiency: First, the highly centralized planned economic system still remains the bad influence. Second, the efficiency is low in facilitating allocation of scarce financial resource inner-bank. Third, in the four state-owned commercial banks, the proportion of the share holding by state is too higher. Fourth, the definition of the property right is not clear in the banking sector of china. Fifth, the structure of administration is too complicated. So we can take the following measures to promote the performance of the banking sector:The micro-measures include: First, improve the competitiveness through providing intermediary services and service disparity. Second, shorten the administration chain and improve the ability responding to the market change. Third, strengthen the corporate governance. The macro-measures: First, government deregulation,drawing into the capital owning by the private citizens and diversification of the property right. Second, the government takes measures to support the development of medium-sized banks in order to deal with the finance problem. Third, set a standard process of termination and accounting of banking institution. Fourth, strengthen the banking supervision, especially the supervision of the China banking regulatory commission.