A perspective of Chinese banking reform - Lessons from transition economies

This article introduces the current situation of the Chinese banking system and its reform. The reform and the development of Chinese banks along with the economic structure reform, many international advanced matter can be learned to improve efficiency and enhance competitiveness of domestic commercial banks. Along with reforming banking system in transition economies, the conclusions is: (1) Rehabilitation approach appears fit for China's situation where a gradual approach has been undertaken rather than a shock therapy approach. (2) Encouraging more small and medium-sized banks is a necessary step to enhance the competitiveness of banking market. (3) Chinese government should make considerable efforts to transform state-owned banks into multi-ownership structure. (4) Foreign banks' involvement, such as privatization to strategic foreign investors and foreign bank entry, has been shown as an effective reform strategy. Particular policy recommendations had been made in the end of this article.