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Banking System in China

Banking System in China. Three specialized Banks -. Chinese Bank reforms : 1979-92. Two stages of reform have been undertaken , from 1979 to 1992 and 1993 to present . Stage one began with the creation of a ‘two-tier’ banking system.

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Banking System in China

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  1. Banking System in China

  2. Three specialized Banks -

  3. Chinese Bank reforms : 1979-92 • Two stages of reform have been undertaken , from 1979 to 1992 and 1993 to present . • Stage one began with the creation of a ‘two-tier’ banking system. • Between 1979 and 1984 the specialized banks were separated from direct control of the PBC/MoF.

  4. In 1984- • the Industrial and Commercial Bank of China (ICBC) was established, • To assume the PBC’s deposit taking function • Granting loans to state owned industrial and commercial enterprises in urban areas In 1985- • The ICBC, the ABC, BOC and CCB were allowed to accept deposits and make loans to households and corporates, via nation-wide branches

  5. PBC in 1984- • Officially became the central bank. • Assigned the tasks of formulating monetary policy • Supervising all financial institutions • Because of its continued role in economic development it differed from its western counterparts

  6. Between 1985 and 1992- • To promote more competition, the Chinese government permitted the establishment of new “small and medium-sized” commercial banks • Which initially offered universal banking services to households and firms, mainly in the regions and cities.

  7. This group included- • The Shenzhen and Guangdong Development Banks • The CITIC Industrial Bank • Bank of Communications • China Merchants Bank • China Everbright Bank • Hua Xia Bank

  8. Changes because of Banking reforms(first stage)- • rapid growth in the banking sector’s assets and liabilities • Deposits increased by 25 times • By 1992 the market share of the state owned banks was still very high(84% of loans & 78% of Deposits) • The rural credit cooperatives had higher deposit and loan shares than the small/medium-sized commercial banks • Foreign banks had no deposits, and just 1% of the loan maket.

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