Banking Reform in China: International Standards and Chinese Specifics

Acta Oeconomica, Vol. 58, No. 4, December 2008

Posted: 10 Nov 2008

See all articles by Zdenek Kudrna

Zdenek Kudrna

affiliation not provided to SSRN

Date Written: September 23, 2008

Abstract

This paper reviews the progress of banking reforms in China. Since 2002, the reform strategy has relied on publicly-financed bailouts, implementation of international best practices in bank governance and regulation, and listing of major banks in Hong Kong. The three largest banks have been stabilised, but we find little reason to expect this to be sustainable. Prudential indicators are comparable to international averages, but this is an outcome of bailouts and ongoing credit boom. Reforms of bank governance and regulatory frameworks that would alter banker's incentives are implemented in a selective manner; principles that concentrate key powers in the center are implemented vigorously, whereas those that require independent boards and regulators are ignored. Selectiveness of institutional reform means that the largest banks remain under state control and can be used as means of development policy for the better or the worse.

Keywords: China, banks, reform, international standards

JEL Classification: G21, G28, P34

Suggested Citation

Kudrna, Zdenek, Banking Reform in China: International Standards and Chinese Specifics (September 23, 2008). Acta Oeconomica, Vol. 58, No. 4, December 2008, Available at SSRN: https://ssrn.com/abstract=1272334

Zdenek Kudrna (Contact Author)

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