The Barriers Of Private Capital Entering The Commercial Banking

The commercial banking is the pillar of China’s financial market and plays an irreplaceable role in maintaining international financial stability and promoting the smooth development of the national economy. However, the commercial banking in our country was established before the market economy system was established. Although state-owned banks have experienced several major reform, but there are still many problems,such as unclear property rights, non-separation between authority and enterprise, lack of market competition, monopoly power over high and low efficiency and so on. Therefore, it is necessary to continue to promote the reform of state-owned banks.Private capital is an indispensable and important force in China’s economic and social development. With the process of reform and opening up in China for more than 30 years, the private capital has been greatly developed. However, due to the imperfect financial market in our country and the narrow investment channels, private capital in order to pursue high profits, speculative housing market, livelihood supplies, etc. It constantly stir fry to make a bubble and inflow into private capital lending market on a large scale, so private capital bear a high risk with a "money" gamble, which is not effectively play its real role. The introduction of private capital into the commercial banking is an effective way to solve the problems of state-owned banks and private capital. By using the clarification of property rights of private capital, we can solve the problem that the main body of state-owned banks’property right is not in place, restrict the non market government behavior of the state-owned commercial bank, the entry of private capital will aggravate the competition of the whole banking industry, and break the existing monopoly power. Banks will not only rely on income of interest difference to improve the income and will enhance the service, differentiated competition, optimize management to strengthen their comprehensive competitiveness.At the level of legal and policy, the state has allowed private capital to enter, but the reality is that private capital getting into the state-owned commercial banks is "visible, cannot eat". There are many reasons for this:first of all, the private capital itself is weak relative to the state-owned capital. From all aspects of the data we can see that China’s small and medium sized enterprises are facing difficulties in financing, policy support, information access, resource access, which is in an unfair situation compared with the state-owned enterprises. Private enterprises is not bigger and stronger as the main status of private capital. The duration of the private enterprise is short, market maturity is limited, how to have the strength to enter the state-owned bank. The other reason is the "two door":private capital is allowed to enter, but the cumbersome approval system, additional terms, obstruction of vested interests and reform measures not in place block the entry of private capital. Also, even if private capital can enter but it is difficult to do with the state-owned capital on an equal footing in essence. Decision-making authority is still in the hands of the state, checks and balances the non market behavior of the state-owned commercial banks will become an empty word. Private capital will become a "helper" of the non market behavior of the state-owned bank executives in another form, their interests can not be guaranteed. In addition, the state-owned capital in China’s state-owned banks accounted for a high proportion of equity crowding out private capital space. Whether the flow of state-owned capital will cause the loss of state-owned assets, which is also the focus of the whole people. So before the transfer mechanism of state-owned capital is not perfect, managers of state-owned banks are unwilling to take the charge of "loss of state assets" to reduce the state-owned shares.All these become the barriers of private capital into China’s commercial banking. In view of these barriers we can get rid of them step by step. Improve the legal rules of private capital to enter, protect the right of the private capital, support and develop the private economy, bigger and stronger private capital and lead them into the commercial banking reasonably. Improve and perfect the financial capital market, and create a favorable platform for the private capital and state-owned capital circulation. Reduce the proportion of state-owned capital in the four major banks, to make room for private capital to enter. Establish deposit insurance system, Enhance the confidence of the public for the banking sector after the reduction of state owned capital in state-owned bank to provide protection for the exit mechanism.