USEUROPEAFRICAASIA 中文雙語Fran?ais
    Business
    Home / Business / View

    Further banking reforms

    By Hua Xiuping | China Daily | Updated: 2013-06-05 08:02

    Broadening ownership arrangements in the industry will facilitate risk management and mobilize market resources

    The banking sector occupies a key position in China's financial system. The capital market in China is relatively underdeveloped and the banking system is the main source of domestic financing. The banking sector influences economic growth, poverty alleviation and the allocation of assets, hence it is critical to identify policies that encourage efficient bank operations.

    The remarkable progress that China's banking industry has made in the last several decades has attracted a lot of attention around the world. The government has transformed the banking sector from a centralized and government-owned system to a more commercially driven system. The recapitalization and equitization of the four biggest wholly State-owned banks, namely the Bank of China, China Construction Bank, the Industrial and Commercial Bank of China and the Agricultural Bank of China, was one of the most recent and significant steps in moving bank restructuring forward. More importantly, the regulatory authorities have put more effort into regulating corporate governance according to international standards.

    Many measures have also been taken to increase foreigners' access to the banking sector, such as subsidiaries and ownership of banks. By allowing foreigners to access the domestic market, a greater supply of aggregate bank credit has been provided to domestic borrowers, which has helped firms with financial constraints, although only a certain type of borrower has benefited. Foreign competition has also helped domestic banks to run more efficiently.

    However, the domestic private ownership share of banks in China is rather low. There are various reasons for this. One explanation is China's judicial system is less efficient and the protection of private property is weaker than in Western countries. Thus many of China's domestic private firms are more short-term oriented. It is generally agreed that short-termism is associated with greater risk and this affects both corporate governance and asset allocation. Higher risk preference and the low quality of many domestic private firms' corporate governance have made China's banking industry regulators more reluctant to issue approval to open a private bank or a new branch.

    China's foreign ownership share is not high either. Although China's financial openness is increasing, so far foreign bank entry still remains at a relatively low level. The percentage of bank assets at foreign-owned banks in China is still below 4 percent. China's economy is still in the process of transition and there is ample evidence that foreign banks are more efficient than domestic banks in transition economies.

    Why is the foreign banks' ownership share still low after China joined the World Trade Organization? People in Western countries like to complain about unfair or inappropriate competition in China's banking sector. They argue the capital requirements are a de-facto barrier to entry and so foreign ownership has been effectively limited. Other complaints include overly restrictive requirements for a foreign bank to offer financial services in renminbi and a very slow and cumbersome process for obtaining approval to open a new bank or branch. Some claim that without the preferential treatment offered by the Chinese government, most of the State-owned commercial banks would have no competitive advantage over their foreign counterparts in China's financial markets.

    Whether these claims are true or not is hard to test. But no one is able to deny that problems, though hidden, still exist in China's State-owned commercial banks. Although their profitability is increasing, there is a likelihood of a sharp rise in nonperforming loans if there is a big drop in housing prices or a wave of local government debt defaults. Besides, underground banking has been flourishing and hidden exposure has been accumulated, which is also likely to give rise to nonperforming loans in the banking industry.

    To facilitate risk management and to mobilize resources, the ownership arrangements of China's banking industry should be broadened to introduce more competition. A higher degree of openness to both domestic and foreign investors is needed. Moreover, given the global trend, China's regulatory system should move toward supervision and away from regulation.

    The author is assistant professor of finance, Nottingham University Business School, China.

    Most Viewed in 24 Hours
    Copyright 1995 - . All rights reserved. The content (including but not limited to text, photo, multimedia information, etc) published in this site belongs to China Daily Information Co (CDIC). Without written authorization from CDIC, such content shall not be republished or used in any form. Note: Browsers with 1024*768 or higher resolution are suggested for this site.
    License for publishing multimedia online 0108263

    Registration Number: 130349
    FOLLOW US
     
    亚洲人成影院在线无码观看| 最近中文字幕mv免费高清视频8| 欧美乱人伦人妻中文字幕| 亚洲AV无码一区二区二三区入口| 亚洲中文字幕无码爆乳av中文| 亚洲av永久无码精品国产精品 | 人妻丰满熟妇aⅴ无码| 中文字幕aⅴ人妻一区二区| 日韩精品无码一区二区三区不卡 | 无码AV动漫精品一区二区免费| 亚洲精品人成无码中文毛片| 无码国产色欲XXXXX视频| 亚洲中文无韩国r级电影| 中文字幕网伦射乱中文| 成人午夜福利免费无码视频| 无码AV天堂一区二区三区| 高清无码v视频日本www| 最近中文字幕电影大全免费版| 中文字幕在线无码一区| 精品人妻系列无码人妻免费视频| 日韩乱码人妻无码中文字幕 | 久久综合精品国产二区无码| 蜜桃无码一区二区三区| 日韩综合无码一区二区| 亚洲欧美成人久久综合中文网 | 国产亚洲大尺度无码无码专线 | 狠狠躁天天躁无码中文字幕| 亚洲精品一级无码中文字幕| 99久久精品无码一区二区毛片| 亚洲AV无码一区东京热久久 | 久久Av无码精品人妻系列| 亚洲人成人无码网www电影首页| 国产资源网中文最新版| 亚洲制服中文字幕第一区| 色婷婷综合久久久中文字幕| 亚洲欧美日韩中文久久| 最近中文字幕高清免费中文字幕mv| 中文在线最新版天堂8| 欧美日韩中文字幕在线| 人妻AV中出无码内射| 亚洲AV人无码激艳猛片|