China's Banking Market Structure And The Reorganization Of Research

From the setting up of the four specialized banks in 1979, reform of our banking industry having been carried on continuously. In 1995, the nation promulgated "commercial bank law", which is the symbol of the beginning of the commercialization of the four specialized banks. But it is a long and difficult process, because the problems left over from the planed economy cannot be removed immediately. The past reforms mainly dwelt on removing the banks' bad assets in order to beef up their competition power, and then shift to their structure of property right and company -managing aiming at improving the banks' operation in essence. But in the whole process, we have neglected the structure of the banking industry. If the past reform was from a microscopic angle, then this is a macroscopic problem. There is no change in the state of monopoly in the banking industry which is the appearance of "market-fail". Banking industry has been categorized in "the third industry", so it should give support to economy development. But monopoly will break up this purpose .Under the framework of theory of industry organization, market sum and the degree of concentration are two indexes to tell whether there is monopoly in the market .In the analysis of market sum, we select four indexes: asset sum, deposit sum ,loan sum and number of branches ;in the analysis of degree of concentration ,we mainly dwelled on CRn index and HHI index .From the research ,we concluded that there is high degree of monopoly in the banking industry of our nation and this will lead to low efficiency in financial resource allocation .Pareto Efficiency requires a free market ,so what we can do is to break the state of monopoly and introduce effective competition to the market. There are three ways to do this: dilute the market power of the nation-owned banks, reform the small-scale banking institutions and set up private banks. After the reform, the banks can be divided into two levels due to their scale, the original nation-owned...