China's Banking Market Structure, Performance And The Relationship Between The Two Study

Under the background of financial liberalization and the development of information technology, banks in all countries have shown two major trends:one is to actively promote the combination and cross-border M&A; secondly, the banking business scope expands widely. All these reflect competition between global banks intensifies. In addition, China's WTO accession of protection has passed; foreign Banks' overall entering and bringing competition will enable China's banking face unprecedented challenges. How to optimize market mechanism, improve performance, and thereby enhance international competitiveness has become major issue that Chinese banking now faces.At present, among the domestic and foreign research about the relationship between banking market structure and performance, Market Power Hypothesis and Efficiency Structure Hypothesis are most representative, the same of these two structural hypotheses is that they all think the market structure and performance have positive statistical relationship, and the difference mainly lies in how to explain their relationship. Foreign scholars have done a lot of empirical work research on the relationship between banking market structure and performance, which mainly focus on the explanation of their correlation, and whether to support the two hypotheses. But due to the data sources and using method are different; the conclusion of the relationship between structure and performance is not uniform.This paper will study the relationship between banking structure and performance on the basis of domestic and foreign scholars'research and the framework of structure-behavior -performance (S-C-P) in industrial organization theory, sample period from 1999 to2008, with the 16 major commercial banks as sample, data mainly comes from 2000 to 2009 China financial yearbook. The article mainly includes the following several aspects:the first part is the introduction and comments of related theories and research situation of the relationship between banking market structure and performance; the second part is choosing market share, market concentration, entry and exit barriers, product differentiation degree, scale economy as analysis indicators to study our country banking market structure, the result shows that although current type oligarchic monopoly market structure won't disappear in the short term, but in long run, the degree of market structure monopoly is gradually reduce; from nonprofit, liquidity and safety to analysis the banking performance situation, and choose ROA and ROE as profitability index, deposit-loan ratio as liquidity indicator and bad loans and capital adequacy ratios as safety index, the result shows that with the deepening of financial reform and economic developing, the total performance of our country banking has improved, and the ability to resist risk has enhanced, almost all the urban banks have meet the basic meet the requirement of 8% capital adequacy that Basel Rules requires; the third part is using Eviews6.0 software to establish econometric models to analysis the relationship between market structure and performance state-owned in the aspect of commercial banks and joint-equity commercial banks with regressions, the empirical result shows that:(1) market concentration is a significant negative correlation with banks' performance and Market Power Hypothesis doesn't exist in China's banking market; (2) market concentration and market share have a significant negative correlation with performance of state-owned commercial banks; (3) market concentration and market share have not a significant negative correlation with performance in joint-stock commercial banks; the fourth part is to propose relevant policy suggestions of improving the performance, optimizing China's banking market structure and increasing international competitiveness on the basis of the analysis of the empirical results. Suggestions are as follows:firstly, reducing barriers to entry and exit the banking market structure to improve validity; secondly, is to accelerate the pace of the commercialization of the state-owned commercial banks; thirdly, promoting a small and medium-sized commercial banks of property right system reform; fourthly, to relax mixes industry the management control gradually; fifthly is to promote the country's banking merger and reorganization effectively.