The Research On The Market Structure Affects Bank Market Behavior

The China banking have undergone A series of significant change after the Reform andOpenness，and the Market structure have been changed a lot. Especially after join the WTOand opening up the banking industry, more intense competition have been introduce to thedomestic market. As is known to all, banking industry face high risk because of high debt,and the banking industry do play an key role in the economic system, therefore, it is importantto research the characteristics of banking market structure, and its change, which can providebasis for the regulatory policy.This paper improve the classical SCP paradigm by adding the risk factor and desaltingthe Causal relationship between structure and conduct on the base of characteristics of chinabanking. Firstly analyzing the china banking structure from concentration, differences andbarriers of the market. Secondary analyzing the mechanism of market structure how to exertinfluence to bank’s market conduct from Franchise value, risk pricing, and externalsupervision. Thirdly, conducting the panel data model on the basis of data from1995to2010.At last, putting forward the suggestions on how to improve the market structure.By Mechanism analysis and empirical research, this paper give the main conclusionsas follows: first, The china banking structure present the high similarity, high concentration,high market barriers still. Secondly, franchise value can constraint the risk behavior on thewhole, and the decentralization of market can lower the loan interest and reduce loanablefunds, which will reduce the bank’ utility and increase its risk-taking. On the otherhand,supervision can somehow decide the market structure on the base of its situation.Thirdly, different kinds of bank present different result of the empirical research, whichrepresentative difference mechanism about market structure influence the market behavior. Aslast, this paper give the suggestion from three aspects about how to improve the marketstructure, how to reform the State-owned Banks, and how to improve the bank management.