Research On The Performance Of Private Banks In Taiwan And Its Enlightenment To The Development Of Private Banks In Mainland China

After The Third Plenary Session of the 18th CPC Central Committee, the mainland government allows private capital to establish small and medium size banks. However, the mechanism of private banks’ operation and supervision is new subject to mainland china. There are 30 years for Taiwan to establish its first private bank. Mainland and Taiwan has the same culture. What’s more, we also have the same economic backgrounds and opportunity to promote the establishing of private banks. Taiwan’s experience is useful and important.Firstly, we read a large number of historical data and literature. We analysis the economic thought of bank systems’reform. We also figure out the policies and develop pattern of Taiwan private banks. Based on this information, we summarize the experience of Taiwan.Secondly, in order to analysis the outcome of reform, we use the empirical means to examine the performance of Taiwan’s private banks. In this part, we use the factor analysis approach and stochastic frontier analysis approach to calculate the operating performance and compare them to mainland’s banks.Finally, according to the results of empirical analysis, we find out the influencing factors of private banks’performance, such as business scale, the characteristics of their business, the objection of service, regional management and so on.The main research results show that the banks which focus on consumption finance and financial services for small and medium enterprises gains the highest performance. Because of its main business to fill the market vacancy and fit the huge market demand. Mainland China’s banking operating performance and cost efficiency is lower than Taiwan. The main reason is that the banks in mainland have not finished the reform yet.According to the experiences and lessons of Taiwan, our mainland private banks reform policy should focus on the need of market and innovate the business methods. Mainland private banks should also avoid the homogeneous competition with existing large banks in some traditional services. They should pay attention to the cultivation of talent team, strong hardware support and effective internal control mechanism, rather than the pursuit of banks’size and the size of the market share.