The Banking Fragility Index Panorama in China

Abstract

The corresponding impact on china’s banking system is becoming the focus issues of international economy and has become the major theoretical and practical issues for China to deal with the increasingly complex international economic situation. Since 2004 the formation mechanism reform started, China’s banking system experienced a steady development and the supervision on banking fragility keeps pace with times to meet the requirement of operation. How to measure a bank’s operational performance is not get to a conclusion in academic field. This paper aims to review the measurement of banking fragility index of Western and Eastern world and using data on Chinese banks to develop an index of banking fragility and subsequently examine the factors affecting the index. Industry analysis will be introduced in this paper. The academic debates on factors affecting banking fragility index are analyzed and this paper will choose a number of widely-used index for the regression test. The findings about the effective countermeasures to the banking fragility Chinese banks facing as well as the objectives of the financial reform are discussed. A conclusion presents the resulting implications for further research.