The Relationship Between China’s Banking Market Structure And Financial Stability-

As the core of modern economy, Finance plays an important role in the development of the real economy. The steady development of finance can promote economic growth effectively, while the financial crisis are extremely destructive, once breaking our it will affect the development of the whole economy and society. Our financial system belong to bank-based financial system, banking stability is the core of the entire financial system stability. But to many innovations, Internet financial development has affected the banking structure in recent years. So, how to adjust the structure of the banking market to maintain the financial stability is very important. This paper studies on the relationship between banking market structure and financial stability. In this paper, on the basis of so much research, we have done some theoretical analysis and empirical research. First of all, we analyzed the mechanism of how the banking market structure affected the financial stability through bank efficiency, economy, monetary policy, banking supervision, bank opening and other channels, and using the method of structuralism to measure the structure of the banking market; Then combining macro-prudential with micro-prudential methods and selecting basic indicators of financial stability, the time of Chinese financial instability include:1993-1995,1997-1998,2000-2002,2007-2009; Then using financial stability (FS), banking market structure (MS), foreign bank assets share (OPEN), real GDP growth (GDP) to build VAR model to study the relationship between various indicators. Here are the main conclusions of the study:the empirical results show that financial system will not stay in long-term unstable and the banking market structure has a lag and positive affect on financial stability, so we think increasing the centralization of banking system moderately can maintain the stability of financial system. But because of the different credit growth due to economic growth rate and the pros and cons of bank opening are difficult to measure, so the effect of national economic growth and bank opening are difficult to determine.