The Effection Of Market Structure And Efficiency On Banking Industry Performance In China

In recent years,all the reforms of the China's commercial banks are aimed at improving their performance and competitiveness.In order to put forward reasonable suggestions,we should figure out the market structure and competitive environment of China's banking industry in the first.Then we can find the key factors affecting the performance of China's commercial banks.This paper is written under the guidance of the industrial organization theory,using empirical analysis methods,and focus on testing two hypothesis,namely "market power hypothesis(MP)and the" efficiency structure hypothesis(ES).In conclusion,this paper makes the inspection of China's banking market structure and monopolistic competition,and then made a further empirical research on the relationship between China's banking market structure and performance in order to find the key factors determining the performance of commercial banks in China.First,this paper uses the structural method and non-structural method to make a comprehensive test of China's banking market structure and monopoly competition situation,and the test result shows that the market characteristics of the market structure of our banking industry at present is very obvious in the monopolistic competition.After defining the market structure of China's banking industry,it is necessary to measure the efficiency before the hypothesis testing.This paper uses SFA method and FRONTIER4.1 software to measure the level of Production efficiency of China's commercial banks.The results show that the Production efficiency of China's commercial banks overall performance is good,but with the advance of time,the Production efficiency grows at a slower rate.Compared with the non-state-owned banks,the Production efficiency level of state-owned banks is higher but the gap is not large.In order to break the bottleneck of the improvement of Production efficiency of China's commercial banks and find a new way for its improvement,this paper further shows that the ratio of non-performing loans,bank size,capital adequacy ratio,equity concentration and deposit ratio have a significant impact for Production efficiency of China's commercial banks through empirical analysis.The last part of this study empirically analyses the structure-performance hypothesis on the China's banking industry.This part points out that the Production efficiency of banks measured using SFA method and that their business performance is related.Therefore the main factors affecting the Production efficiency rather than the Production efficiency is directly taken in to the regression equation in the final regression analysis.The "market power hypothesis"(MP)is denied by the empirical results,while the "efficiency structure hypothesis "(ES)is supported by part of the evidence.So banks should pay special attention to the Production efficiency and the improvement of internal operation mechanism.In addition,for the first time this paper makes an explanation for the significant negative correlation between the HHI index and the bank's operating performance and makes it clear that the significant negative correlation between the two factors is caused by Production efficiency.