China's Commercial Banking Market Structure, Behavior And Performance Analysis

1.Main contents and viewpointsBesides the preface, this thesis consists of four chapters.Chapter one is the theoretical basis of the thesis. It mainly introducessome basic concepts and the theoretical frame. It is divided into threeparts. Part one introduces three basic concepts, and the mainly analyticalframework from traditional to modern industry organization theory. Parttwo firstly introduces three important concepts, such as banking marketstructure, fund allocation conduct and performances of the commercialbanks. Secondly, the thesis sets a simple analytical framework of thecommercial bank system on the basis of the modern industryorganization theory. Part three is a simple survey of foreign anddomestic studies on the market structure and performance.Chapter two is the main body of this thesis and it is the application of thetheory mentioned above. It consists of two parts. Part one reviews theevolution of China's commercial banks. Part two analyzes five decisivefactors to market structure in China's bank system, such as marketconcentration, economy of scale, barriers to entry and productdifferentiation. To begin with the analysis of market concentrationincluding concentration ratio, hirschman-herfindal index, the thesispoints out that the market concentration of China's bank system is veryhigh with a finding that the value is decreasing gradually. Secondly, thethesis analyzes the current status of economy of scale in bankingindustry. It points out that economy of scale doesn't exist indeed. Thirdly,with the analysis of the entry barriers, the thesis finds that owing toover-regulations in banking industry, the market competition isimperfect actually. After that, the thesis analyzes the classifications andcauses of production differentiation. It holds that because of theexcessive regulations and lacks of innovation, the level of productdifferentiation is very low. At last the thesis reaches a conclusion, on thebasis of analysis in the former part, that there is an evident character ofmonopoly in China's banking industry and this situation will not changewithin a short time.Chapter three consists of four parts. It is the core of this thesis. Part oneanalyzes the fund allocation conduct of Chinese commercial banks.Owing to more than 20 years of reform and development, thenon-state-owned economy has become the leading driving sector thatkeep propelling the sustained and rapid growth of the national economy.Contrary to its contribution to the national economy, it doesn't receivesufficient revolving fund from current bank system. The thesisdemonstrates the irrational conducts of China's commercial banks. Parttwo analyzes the current status of performance in banking industry withan appraisal of performance with profit index, risk index. It finds thatperformance in state-owned banks is inferior to that of middle-smallsized banks. Part three analyzes the steady condition of China's bankingindustry. The state-owned banks are main body of China's bankingindustry, but their performance is much inferior to that of middle-smallsized banks. It will make the bank system dangerous. However, there isa fact that the banking industry is steady, either in the long-run or in theshort-run. On the basis of analyses in the former parts, part four analyzesempirically relationship among market structure, conduct andperformance in China's banking industry. It draws a conclusion that thetheoretical relationship between market structure and conduct does notexist for some reasons. At the same time, the reaction force ofperformance on market structure is very poor. Moreover, although therisk in state-owned banks is very high, the bank system still maintainssteady for a long time. The theoretical relationship between marketstructure and steady of banking system is also invisible.Chapter four consists of two parts. Part one discusses the reasons thatwhy the theoretical relationship among market structure, conduct andperformance in theory does not exist in China's bank system. Basicallyspeaking, the original shape of mark...