Title: China's national banking system: commercialisation and financial stability

Authors: Ron McIver

Addresses: School of Commerce, Division of Business, University of South Australia, Adelaide, South Australia, 5001, Australia

Abstract: This paper analyses China|s success in establishing a commercially–oriented bank system, the system|s ongoing stability, and factors supporting stability. These issues are addressed for the 1997-2003 period through consideration of: the liquidity requirements of commercial banks; and a comprehensive set of macro-economic and micro-prudential indicators suggested by the International Monetary Fund (2000) for the analysis and detection of financial system fragility. The paper concludes that China|s major banks lacked sufficient balance sheet liquidity to operate as commercial banks. Additionally, while China|s banking system was highly sensitive to the macro-economic environment, existence of a financial crisis is not supported.

Keywords: China; commercial banking; macro-prudential framework; NPL; non-performing loans; financial crisis; Chinese national banking; commercialisation; financial stability; liquidity requirements.

DOI: 10.1504/IJEPEE.2009.030939

International Journal of Economic Policy in Emerging Economies, 2009 Vol.2 No.4, pp.391 - 414

Published online: 13 Jan 2010 *

Full-text access for editors Access for subscribers Purchase this article Comment on this article