A Comparative Study Of Chinese And Indian Banking Competitiveness

Renowned management expert Michael Porter pointed out: all industries areinevitable to face competition, there is no one industry can be in the market withoutcompetition, and there is not any country or company can ignore completion. In orderto improve competitiveness, the expansion of the industry, the development of theenterprise must understand their environment and to participate in the competition.Now, the important strategic position of Indian Ocean area has attracted the eyesof the world, As two powers of BRICS, the two countries have known similarities inmany ways, the development of the economy has experienced the similar stage, facedsimilar problems. With the development of the word financial integration, thecompetition of the banking sector is becoming fiercer. The banking industry is a pillarof a country’s financial system,banking itself is socio-economic development offinancial intermediaries, using other people’s money to meet the financing andinvestment demand of others, to establish payment system to complete the valueexchange plays a more and more role in the support and sustainable development of acountry’s economic, the strength of the banking industry competitiveness becomean important symbol of national competitiveness. At present, foreign banks havestarted flood into Chinese market. Compared with domestic banks, foreign bankshave more advanced management concept. Financial products are more diversified, Inthe process of competition, the bank of China can learn from foreign Banks to openup new ideas in the development of banking, but the competition also has brought thehuge pressure, in the past, China and India were two economies with closed bankingsystem that have severely obstructed the economic development. Despite the differentof China’s and India’s social system, But the historical conditions, the basic goals andmain steps of the banking reform has much in common, They could absorb theexperience that suits one’s own country from the other’s successful reforms and drawlessons from their failures. Many economists believe that the potential for economicdevelopment in India is greater than China. Because India’s banking system scale isfar less than China’s savings, but it still maintained a high growth rate. These twocountries are compared in many aspects by scholars from different countries.However, the empirical studies on the competitiveness of banking industry are still inthe blank stage. On the basis of the industrial competitiveness and the comparison of thecompetitiveness evaluation system in both China and India, it conducts research onthe issues restricting the competitiveness of banking industry in China and tables thespecific proposals. It firstly offers a comprehensive research overview of industrialcompetitiveness and competitiveness of banking industry and then establishes thesystem of comparative evaluation index of Chinese and Indian banking industrycompetitiveness on the basis of analyzing the widely-used evaluation index system aswell as the actual situation of the Chinese and Indian banking industry and theavailability of data. The third part proceeds to introduce the development course andcurrent status of the banking industry in the two countries through the empiricalanalysis of their competitiveness with principal component analysis and generates thesynthesis score of the two countries in profitability, risk management capability,operating efficiency and development ability index. It finally comes to the conclusionthat the comprehensive competitiveness of banking industry in China exceeds that ofIndia but India overtakes China in terms of development ability and operatingefficiency. The first-class banks in India is equally matched with that in China interms of all indexes; however, he lagged-behind banks in India are inferior to that inChina with regard to the competitiveness index. Considering the fact that Indiaslightly eclipses China with reference to the supervision system and institutionalconstruction of banking industry, the competitiveness of banking industry in Chinaexceeds that in India, which, however, also enjoys great potential for development.