Market Structure, Welfare, and Banking Reform in China

HKIMR Working Paper No. 30/2009

45 Pages Posted: 21 Jun 2010

See all articles by Chun-Yu Ho

Chun-Yu Ho

State University of New York (SUNY) - Department of Economics

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Date Written: September 30, 2009

Abstract

This paper examines the effects of market deregulation on consumers and state commercial banks in China, a large developing country. I jointly estimate a system of differentiated product demand and pricing equations under alternative market structures. While China's banking reforms overall have achieved mixed results, the consumer surplus of the deposit market has increased. The welfare effects from reforms are unevenly distributed, with losses skewed toward inland provinces and certain consumer groups. There is no clear evidence that the pricing of banking services has become more competitive after the reform, and such pricing remains subject to government intervention. Encouragingly, the price-cost margins of some state commercial banks have fallen over time.

Keywords: Banking Reform, Banks in China, Demand Estimation, Market Structure

JEL Classification: G21, L11

Suggested Citation

Ho, Chun-Yu, Market Structure, Welfare, and Banking Reform in China (September 30, 2009). HKIMR Working Paper No. 30/2009, Available at SSRN: https://ssrn.com/abstract=1627995 or http://dx.doi.org/10.2139/ssrn.1627995

Chun-Yu Ho (Contact Author)

State University of New York (SUNY) - Department of Economics ( email )

1400 Washington Ave
Albany, NY 12222
United States

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