Welcome to my blog!
For the design
For the content, it is based on the Chinese banking system and I divided it into two parts.
In the first part of 6 blogs, I focus on some hot issues debated in current news with respect to the Chinese Banking industry. The issues I follow include:
1. Extravagant profit (also called windfall profit)
Inspired from the statement of “windfall profit in Chinese bank industry has outstripped the profit in industry of tobacco and petroleum” and the report form the central bank, the growing speeds of the commercial banks’ profits are all exceed the market expectation and its side-effect followed is an overtop salary pay.
I conclude that usurious interest margin, high transaction cost, great growth on financial products conducting is the root and I put on more words on the first abnormal interest margin.
2. Foreign exchange reserves
FER is a double-edged sword for China,, in one hand, China has 3.2 trillion US dollars which is sufficiently capable to buy whatever he is willing to, but in another hand, with the Europe crisis brings about and the downgrade of the US credit rating, Chinese Government was seriously worried about the security and capital maintenance (hedging) of the store reserves as the US Government Bond is the main investment and transaction products.
3. Slowdown of Chinese economy and the downgrading of the reserve ratio
Recent statistics states a slowdown in China’s economy and the claim by the vice president seems to verify this fact during his visit to Ireland. However, meanwhile, Chinese central bank downgrades the reserve ratio by 0.5%, aiming at enlarging the funds available to banks for lending.
I explain some reasons for why the reserve ratio is downgraded including stabilize the economic development, liquidity supply, protection of real estate market and finally the consideration for the balance of foreign exchange reserves.
In the second part, I summarized and detailed the banking system with Chinese characteristics. The features are:
1. The banking system to the risk of the buffer is not mainly relying on capital mechanism, but the government credit.
2. China's credit cycle is mainly driven by the government policy, but not commercial banks.
3. Financial repression and insufficient innovation.
In the last blog, after reading two literatures given in the blog, I put forward some introspection for the Chinese banking system briefly. They are
1. The limitations of financial supervision and deregulation.
2. The incapacity of withdrawing lending
