Performance Of Chinese Commercial Banks

A steady bank system is important cornerstones which can help modern economies maintain stability and healthy development. In order to achieve this goal, China's banking industry has experienced a long-term reform process. To review the reform process of China's banking industry in the past 20 years; we can find that the reforms have followed such a path: first reforming the market structure, and then the property right of state-owned enterprises. But the changes of market competition structure in the banking industry and the following reform of joint-stock system have not brought an anticipated improvement of performance actually. This purpose of this thesis is to research all the reasons which have led to the low performance of the banking industry in China.Firstly, it demonstrates the present conditions overall market performance of China's banking industry, from an industrial economics perspective with some performance appraisal indexes, and then it analyzes the reasons. Certainly, there are many factors affecting the market performance of the banking industry, such as the business consciousness, the ideas in competitions, the level of the banks' management, technologies, as well as the development of human resources. But from the perspective of IO, the determinant factors lie in the characteristics of the banking industry itself, i.e., the market conduct of banking industry, the market structure of banking industry, as well as the property right system related.The relationships among the market performance, the market conduct and the market structure can be researched separately in short-run and in long-run. In the short-run, the market structure displays its relative stability and restrains the market conduct. At the same time, the market performance is decided by the internal management conditions of the bank, which is decided by the market conduct. Namely, the market conduct decides the market performance. In the long-run, the market structure is dynamic. The changes of market structure are usually the results of market conduct, and it sometimes also can be directly affected by the market performance. Therefore, in long-run, there are complicated interactional relations among the market performance, the market structure and the market conduct.Moreover, the important factors which decide the market performance also involve the property rights system. Given the government's control in banking industry during the economical transition, the market structure is identified as the decisive factor of the industrial internal efficiency of disposal, while the internal property right structure of the enterprise is the basic reason which decides the enterprise internal efficiency. Therefore, the reform of property rights system is the internal cause which can enhance the performance and the adjustment of structure is external power. The two affect in common promote the enhancement of industrial performance.The methods used in this thesis are theoretical analysis and empirical studies. The contribution of the thesis lies in the theoretical analysis from the industrial economics perspective, and reorganizes it in a new way: that is, starting with the performance, and then analyzing the conduct, the structure and the property rights system in turn.