| The banking in economy plays a vital role in a series of credit allocation and financial intermediaries. Consequently, the stability of banking is an essential condition for healthy and steady development of finance and economy. Especially, the developing country as China which has unsound financial and economical institution, the banking whether has a healthy and steady management is a key for the stable and orderly development of financial and economy. Research of the banking stability in China traced to the attention of The Asian Financial Crisis, and the vulnerability of commercial bank became the spot again because of the 2008 America financial crisis. China’s banking market structure has its own way, the banking industry dominated by state-owned Banks, which is really different between many developed countries. In recent years, the number of joint-stock commercial banks and city commercial banks are rising, making the monopoly of state-owned banks shaken and the concentration of banking eased. The stability of the banking industry has inextricably relationship with the market structure, coupled with the special market structure in our country, so it is quite necessary to do some research between the banking stability and the banking concentration.First of all, this paper discusses the history of Chinese banking market structure development. We find that the monopoly structure of China’s banking industry has formed many years ago, and then gradually become more and more competitive. However, because of the monopoly position of banking too stable, it will be very hard to change it into competitive situation. Secondly, this paper studies the theoretical basis and affecting factors of the banking stability. The economic cycle theory and information asymmetry theory constitutes the theoretical basis of the banking stability. The macro economic factors, the structure of the internal governance factors and market factors constitute the main factors influencing the stability of the bank.In terms of the relationship between the market structure and the banking stability, the impact of the direction of the positive and negative is determined by the different properties of different countries. Thus, it should be studied according to our country’s recent conditions. In this paper, in order to verify the relationship between the stability of China’s banking industry and the banking concentration, we first calculate the stability index, the concentration degree and the competition index. What tell us that the stability of our country is not so stable and the concentration is reduced year by year. According to the calculated result, we panel a data model, the regression results show that it will be better to reduce the banking concentration in our country. At the same time, because of our country’s low competition degree, it will also be better to increase the banking competition degree. In the study of how competition degree effects the stability of the banking system, considering the development of economic globalization and financial liberalization, joined the competition of foreign banks concentration. The study tells us that it will be good at our country’s banking stability to encourage foreign banks entering and joined the market competition, According to the results of this study, this paper puts forward some suggestions. First of all, we should strengthen regulatory oversight to improve the access mechanism; Secondly, it is better to encourage small excessive banks to increase lending and deposit scale and take different interest rates and reserve rates between different banks; Thirdly, promote the competition from different fields and develop more special banking business; Fourthly, set up a proper explicit deposit insurance system to ensure that the bank stability. |
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