Abstract
China’s economy presents a new normal of speed changes, structural optimization, and power conversion. Deepening supply-side reforms and controlling financial risks are two prominent themes of current economic work. With the economic growth slowing down and the financing environment tightening, the credit risk of the banking industry is being exposed more quickly. This article uses a structured method and an unstructured method to measure the competitiveness of China commercial bank credit market. The structured method uses the HHI (Herfindahl–Hirschman Index), and the unstructured method uses the Lerner Index. This article compares the sample banks’ 2008–2015 industry loan total HHI and Lerner Index. The results of HHI and Lerner Index are basically the same, which indicate that the competitiveness of the China commercial bank credit market is generally at a low level. However, the Lerner Index has a clear upward trend after 2014, which indicates the possibility of increased competition in the credit market.
Highlights
Introduction eChinese banking industry has been receiving great attention from the media in recent years, and there have been numerous reports of banks making high profits. is situation has triggered a lot of public criticism of the Chinese banking industry
On the one hand, judging from the proportion of nonstate-owned capital in Chinese commercial banks, the 2014 annual report of the China Banking Regulatory Commission showed that some small- and medium-sized commercial banks are 100% private capital
From the perspective of the concentration of China’s banking industry, the data of the main regulatory indicators for the third quarter of 2017 released by the China Securities Regulatory Commission show that the proportion of the total assets of the top five banks in China in the total assets of the banking industry decreased from 63% in 1989 to 37.3% in 2017; this market concentration is lower than that of the top 10 developed countries such as the United States, Japan, Germany, and France, and other BRICS countries except India
Summary
College of Finance & Information, Ningbo University of Finance & Economics, Ningbo 315175, China. Is article uses a structured method and an unstructured method to measure the competitiveness of China commercial bank credit market. E results of HHI and Lerner Index are basically the same, which indicate that the competitiveness of the China commercial bank credit market is generally at a low level. Based on the concentrationvulnerability hypothesis, the degree of bank competition can be used for an effective intermediary variables of bank concentration affecting bank risk [8], and the Lerner Index used for the measurement accuracy can reflect the market structure of the banking industry. Is article compares HHI measurement with Lerner Index measurement and measures the credit concentration risk of China’s banking industry from two perspectives: structured and unstructured. When categorizing and identifying the concentration risks in the banking industry, the HHI is calculated using corporate loans from various commercial banks, banks are divided into different categories, and the HHI of different types of banks is compiled by weighting the proportion of assets. e equation for calculating the credit concentration risk index of type m commercial bank is Market structure
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