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International Competitiveness of China's Banking Industry: A Multi-dimensional Examination
[Thesis]. Manchester, UK: The University of Manchester; 2015.
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Abstract
ABSTRACTOf this thesis submitted by Zhijun Xiu for the degree of MPhil and entitled“International Competitiveness of China’s Banking Industry:A Multi-dimensional Examination Perspective”Manchester Business SchoolThe University of ManchesterAccompanying the globalisation of the world economy and the internationalisation of Chinese CBs, the research in terms of the international competitiveness of the CBI and Chinese CBs has become urgent and significant. The motivations and targets of this research are to understand the status quo of international competitiveness of the CBI and Chinese CBs; to recognise the actual gap in the aspects of international competitiveness between Chinese CBs and the Western advanced CBs; to find out the issues and main causes that existed in and determined the international competitiveness of Chinese CBs; and to work out the approaches to solve the issues and boost the international competitiveness of the CBI and Chinese CBs. According to the analyses of the international background, domestic context and specific situation, and the review of previous relevant literatures in terms of the international competitiveness and international competitiveness of CB, the general framework of this research is based on the fundamental theory – New Institutional Economics (NIE), especially the Institutional Change Theory (ICT), and applied four key factors – Business Scale, Profitability, Asset Quality and Overseas Business Margin, as well as some necessary macro and micro -specific determinants, to multi-dimensionally examine and comprehensivelyevaluate the real level of international competitiveness of the CBI and some Chinese CBs during the last three decades, in particular during the last decade since 2003. This basic framework established the theoretical foundation for this research; it is the general framework that is jointly consisted of the constitution, determinants and evaluation sub-frameworks of international competitiveness of CB. In this research, the international competitiveness of CB mainly includes: Business Scale International Competitiveness, Profitability International Competitiveness, Soundness International Competitiveness and Overseas Business International Competitiveness. These four aspects of international competitiveness of CB can be all measured by relative indicators that can be calculated through relative financial data; thus, the international competitiveness of CB could be then synthetically, directly andexternally evaluated and reflected.Basically, the determined framework of international competitiveness of CB is referred to reveal how the international competiveness of CB is determined. According to the value theory of dialectical-materialism, object development is decided by its internal and external causes; therefore, in this research, the scale, management, technology and international administration are considered as the major internal factors to determine the international competitiveness of CB, while the governmental functions, horizontal industrial competition, market supply and demands, and industrial trend at home and abroad are suggested as themajor external factors to reflect the international competitiveness of CB. Based on the determined framework and the internal-external cause theory, as well as considering the cross-border competition as the mainstream of the international competition for CBs, it can be seen that the deciding model and evaluation model are combined together to set up the overall models for evaluating and reflecting the international competitiveness of China’s CBs. According to the results calculated by the models, the separate and joint evaluations are made to jointly estimate the real level of international competitiveness of Chinese CBs; then the internal and external critical analyses are taken into consideration to reveal how the internal and external major factors reflect and influence the international competitiveness of CBI. Finally, a set of approaches in terms of how to further improve and boost the internationalcompetitiveness of the CBI and Chinese CBs are accordingly suggested.The findings of this research present that the historical evolution of China’s banking is fundamentally driven by the institutional changes and the shifts of administrative ideologies of the CCP; and intrinsically influenced by the dominant culture of Confucianism in China. The international competitiveness of the CBI has been increasingly improving, in particular since 2003; the development of the CBI has been actually always adhering to the reform and opening-up guideline in terms of “Crossing the River by Touching the Stones”, and the internationalisation of the CBI has been mostly suggested to insist on a strategy of “Incremental Approach”, which also represents the Way of the Golden Mean (Zhong Yong Zhi Dao) of Confucian ideology and acting philosophy. According to the evaluation results, Chinese CBs hold a very strong IC on the Business Scale and Home-base Profitability; their Soundness IC has bee also hugely improved; however, if comparing with their foreign advanced peers, such like HSBC and JP Morgan etc., their overseas business IC has been relatively much weaker; this means that the internationalisation of CBI and Chinese CB still has a long way to go to strategically catch up and explore.Additionally, other sense of the banking industry is also highly recognised. The real essence of China’s banking reform has been eventually designed by the elites and ultimately influenced by the special interest groups. The fundamental issues of the banking sector have been not completely handled; the financial ecology of the banking business has been one of the greatest factors for the banking performance; the international competitiveness of Chinese CBs has been mostly country-specific and home-based; and the whole banking system has been seemingly-seriously captured by the housing market and the municipal platform debts; hence, these huge potential operating risks have been seriously concerned. Conclusively, the international competitiveness of Chinese CBs would have been significantly damaged if the banking industry could not be further improve the regulatory regime, optimise the business environment, reform the corporate governance structure, consummate the operational system;and work out the deep and ingenerate issues such as lending mechanism, profitability model, risk management, technological innovation, political intervention, internationalising strategy, etc.Even though this researcher has taken great efforts to make his own contributions in this project, the findings and conclusions are still thought to be not sophisticate and significant enough; hence, further research of this specific theme will be more deepening and focusing, in particular on the improvement of the research methodology, the data collection and the financial ecology of the CBI.
Keyword(s)
CBI, International Competitiveness, Internationalisation, NIE, ICT; Confucianism, CCP, Ideology, Financial Ecology, Property Rights