A Study On The Impact Of Banking Market Structure On Financial Stability

Since the early1970’s, along with economic globalization and financial globalization process has accelerated, the environment of the financial industry is facing an increasingly complicated, and intensification of the global banking industry has started a new round of mergers and purchase of the banking industry and optimize the market mechanism. Meanwhile, electronic information technology and financial innovation, the Bank will have more opportunities to be engaged in venture capital, the risks have increased, causing the banking industry vulnerability to increasing day by day, the frequency and scope of the banking crisis has to undertake the trend of escalation. The research of existing literature to the banking and financial market stability based on the practice of developed countries to launch, on the banks of the market mechanism and financial stability, analyze the results of China’s Banking Industry mechanism on the financial stability in the important theory and practical significance.This Article from the analysis of the reality of international economic environment and our country, and research of the banking industry and market mechanism to financial stability. First, carry on the literature review, the analysis of the international experience to the banking industry on the financial market stability than to use for reference. Second, use (Shanghai) as an example to carry on the measures for the banking industry and financial stability. Once more, reviewing the basis of Shanghai Banking Industry, the market mechanism to change course use concentration ratio, Herfindal index and H method of structuralism in any way the method of structuralism estimates of the Shanghai Banking Industry for the changing conditions; On the weight of the financial stability in the index to financial stability in Shanghai. Then, what about the results of the Shanghai Banking on the market for financial stability to producethe use of econometric autocorrelation, and conducted empirical study. Finally,the Article concluded the conclusion and forecast of the policy proposals andresearch.Through theoretical research and empirical research, the main conclusionsof this paper are as follows:(1) from a theoretical point of view, the marketstructure is not optimal is the complete competition market structure, but there isa certain degree of monopoly.(2) rfom the international experience, bankingmarket concentration and the market competition has a positive effect on themaintenance of financial stability, the two are not contradictory, bankconcentration is not a measure of the degree of market competition full index.Because of the special nature of banks, to maintain a certain degree of marketconcentration is conducive to maintaining ifnancial stability, the perfectcombination of moderate concentration and moderate competition, is the bestbank in a country financial stability under the premise of industry structure andlayout.(3) on the situation of industry market structure in our country generallyBank (in the case of Shanghai) measure, both the structural and non structuralmethod, results show that: the degree of competition in China’s banking industry(in the case of Shanghai) has been signiifcantly strengthened in the years2000-2011，generally in a state of monopoly and competition that.(4) using theeconometric analysis method on the financial stability of Shanghai city measureresults show that: during th’e period of2000-2011, Shanghais financial systemdoes not appear very unstable situation, basically remained stable development.(5) the empirical results show that both long term and short term, appropriate tomaintain a certain degree of market concentration is conducive to maintainingfinancial stability. At the same time，the banking competition degree of long-term than in the short-term impact on ifnancial stability.This paper attempts to make some innovation in the following three aspects.(l)New conception: On the relationship between banking structure and financialstability as the breakthrough point, this point has not yet been studied by scholarsat home and abroad attention.(2)New method: Multi angle investigation bydegrees, Beh Finn Dahl index and H statistics on the new industrial organizationtheory in the industry of banking market structure and competition situationchanges.(3)New indicators: from the perspective of financial stability to set theindex system, and selects the financial stability of9core indicators for years inShanghai city were measured.