Implicit Guarantee Of The China Banking Countries Withdrew From The Study

Referring to state implicit guarantee in banking sector, this article makes a systematic exploration about the reason, operational mechanism and withdrawal process of state implicit guarantee in Chinese banking industry. By reviewing withdrawal practice of implicit government guarantee in typical transitional economy, the article also obtains some experience and lessons in this field. On the ground of analysis above, we make suggestions for the further withdrawal of state implicit guarantee in China.Firstly, according to institutional background of state-owned commercial banks, we establish a comprehensive analytical framework. From micro perspective, we display the effect of state implicit guarantee on banking operation through the James two-stage model. From macro perspective, we elaborate the relationship between state implicit guarantee and macro financial risk. Further more, we reason the inevitability of withdrawal of state implicit guarantee in Chinese banking sector.The withdrawal process of state implicit guarantee in Chinese banking sector is characterized by fadeout of policy finance, transforming state-owned commercial banks into stock entities and substitution of risk compensation mechanism. However, we will encounter many obstacles in the further withdrawal process, because of incomplete termination of policy finance, the halfway property right reform in state-owned banks, and omission of market-oriented risk compensation mechanism, backward legal system and adverse selection caused by omission of market constraint.We conclude that the crux of successful withdrawal of state implicit guarantee lies in whether we can find the balance point between maintaining financial stability and guarding against moral hazard. In light of this, we should deepen the shareholding reform in state-owned banks, explore the market-oriented elimination mechanism for abortive financial establishments, improve relevant legislative framework and accelerate the establishment of deposit insurance mechanism.