China's Banking Market Structure On Economic Growth

The impact of banking market structure is one of the important factors of economic growth. Based on a simple economic growth model-AK model, the paper concludes that the economic growth rate of a country depends on the marginal productivity of capital, the transform rate of saving to investment and savings rate. And through these variables, the banking market structure will have positive or negative impact on economic growth.By applying the Industrial Organization Theory as an analysis tool, the paper argues that: China banking market structure is oligopolistic, which will have a negative impact on economic growth. From the bank's macro credit allocation, the market structure results in the difficulty for the small and medium-sized firms to get loans and an extremely high rate of non-performing loans, which reduces the marginal productivity of capital in our country; From the micro busyness performance of Chinese banks, the market structure results in a large capital surplus and lower capital gains rate, which reduces the transform rate of saving to investment. According to the model-AK model, the lowering of the marginal productivity of capital and the transform rate of saving to investment will inevitably have a negative impact on economic growth of our country.So this paper argues that we should strengthen our country's banking market competitive and optimize the structure of banking market of China. Combining with the importance of the small and medium enterprises in the national economy, we should vigorously develop small and medium-sized banks so that change the banking market structure of our country into a monopolistic competition model. Finally the paper presents a series of optimization policy recommendations.