Banking Profitability in China Research Paper by The Research Group

Banking Profitability in China
A discussion on the effects of banking profitability in China.
# 73412 | 3,150 words | 15 sources | MLA | 2004 | US
Published on Dec 01, 2004 in Business (Finance, Investment and Banking) , Business (International)

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This paper offers an in depth review of the literature on banking profitability in China and its effects on the economy. The paper addresses the nonperforming loan problem in China, foreign competition in the financial services sector, the Bank of China, the role of the Chinese government regarding bank profitability and competition from other types of institutions.

Non-Performing Loans and Risk Assessment
Foreign Competition
The Bank of China
The Role of the Government Regarding Banking Profitability in China
Competition from Other Types of Institutions

From the Paper:

"China is eager to prove its commitment to risk assessment in order to provide a more stable financial services industry as evidenced in an article posted in the Asia Africa Intelligence Wire in mid-2004. That article details the adoption of a CAMELS like risk assessment program imposed on joint-stock commercial banks by the China Banking Regulatory Commission (CBRC). This new risk assessment program is designed to ensure that Chinese banks follow procedures similar to Western banks when determining their risk levels; such a program is believed to be a critical factor in the entrance of Chinese banks into the realm of true international finance. The risk assessment matrix implemented by the CBRC combines analysis of capital adequacy with asset quality, management capability, liquidity and profitability. In the long-term, banks which are able to use risk assessment tools such as this are able to better identify their deficiencies and, as a result, improve their financial institution's overall profitability ("China CBRC" n.p.).
"The nonperforming loan problem in China has been well-noted among foreign observers. The Economist observed that banking profitability is critical to the long-term performance of the Chinese economy, but that banks cannot resolve their solvency crisis without improvements in business performance, but business has inadequate access to capital since banks with high levels of nonperforming loans are unavailable to fund new economic development to sufficient levels ("Money Worries" n.p.)."

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