China's Commercial Banking Market Structure And Performance Analysis

1.Main content and viewpoints Besides the preface, this thesis consists of four chapters.Chapter one is the theoretical basis of the thesis. It mainly introduces some basic concepts and a theoretical frame. It is divided into four parts. Part one introduces the development history of industrial organization theory. Part two introduces market structure theory, such as market concentration, economy of scales, economy of scope, Market barriers and product differentiation. Part three introduces the definition and measurement of performance. Part four introduces two main hypotheses: traditional collusion hypothesis and efficient structure hypothesis. Besides, it makes a review on the reference about market structure and performance.Chapter two is the main body of this thesis and is the application of the theory above-mentioned. It consists of seven parts. Part one reviews the Chinese commercial banks evolution. Part two analyses the present condition of market shares in banking industry. It points out the market share of state-owned commercial banks is greatly higher than that of middle-small sized banks. Part three analyzes market concentration including concentration ratio, herfindal index, Lorenz curve and Gini coefficient .it points out the market concentration is very high. But the value is decreasing gradually. Part four mainly analyses the current condition of economy of scale and scope in banking industry .it points out that economy of scale and scope exists indeed, but is not obvious. Part five analyses the entry barriers and withdrawal barriers. It finds that owing to abundant policy regulations in banking industry, Monopoly and excessive competition exist at the same time. Part six analyzes the classification and cause of production differentiation. It holds that because of excessive regulation and lacking of innovation, the level of product differentiation is very low. Part seven reaches a conclusion on the basis of analyses in the former parts. It holds that there is an evident character of monopoly in Chinese banking industry and this situation will be changed gradually in the future years.Chapter three consists of two parts. it is the core of this thesis. Part one analyzes the current condition of market performance in banking industry .it makes an appraisal of performance with profit index, cost index and risk index. It finds performance in state-owned banks is inferior to that of middle-small sized banks. Part two analyzes empirically relationship between market structure and performance in Chinese banking industry .it draws a conclusion that the relationship between them accords with neither traditional collusion hypothesis nor efficient structure hypothesis. At the meantime, it finds efficiency and macroeconomic condition are the main determinants of performance. There is negative statistical relationship between market concentration and performance.Chapter four consists of two parts. Part one discusses the reasons why Chinese banking industry performance is low. Basically speaking, it is the single state-owned property rights that produce the low performance instead of high concentration. Part two presents some advice on how to enhance performance and improve efficiency of domestic commercial banks. The measures include propelling property rights reform in state-owned banks that is the most important in all the reforms and perfecting market structure, such as enlarging the middle-small sized banks to increase competition.2.the contributions and shortcomings of the thesisMost of the papers that apply the theory of industrial organization to study Chinese banking industry only concentrate on the market structure analyses. This thesis studies performance and the relationship between them not only from theoretical angle but also from empirical angle. Meanwhile, this thesis reaches a conclusion what result in low performance in domestic commercial banking industry are the single state-owned property rights and traditional mechanism. It is the most valuable contribution of the...