Banking reforms in the transitional economy of China

Abstract

The banking reforms in China have played an instrumental role in the countrya??s overall effort to transform a centrally-planned economy into a market-driven economy. The thesis examines the changes that took place in the banking system from 1979 to 2003. It finds answers to some important policy-related questions concerning the impact of banking industry development on Chinaa??s overall economic growth. The relative technical and scale efficiencies of a sample of Chinese banks are analyzed using a non-parametric technique, called Data Envelopment Analysis (DEA). The thesis also concludes that the central bank, the Peoplea??s Bank of China (PBC), has only gained some operational independence and not complete independence as Chinaa??s central banker. Finally, in assessing the implications of Chinaa??s accession to the World Trade Organization (WTO) on domestic banking, the thesis highlights that the banks need to embark on some major strategies to counter the increasing competition from their foreign counterparts.