Three essays on the banking and financial sector of China

Résumé

In the past two decades, China has embraced a series of social and economic reforms and, meanwhile, witnessed a rapid economic development. In 1998, the Chinese government launched a substantive reform of the property market. Since then, a significant change has taken place in housing financing. In my thesis, the relationship between mortgage loans and property and to what extent the monetary policy can affect the property and mortgage markets will be investigated. Besides, we will also test the real effect of the urbanization process on the mortgage credit boom in China. The findings have important policy implications which are related to the existing monetary policies which are being implemented in China. On the other hand, the banking sector has kept on introducing new reforms. The most noteworthy improvement is the liberalization of the banking system, e.g. freeing up interest rates and foreign bank entry. By 2010, all State-Owned banks have successfully completed the process of Initial Public Offering and have been transformed into listed companies. As a consequence, it appears that the performance of Chinese banking sector has enhanced significantly. According to the Banker magazine's annual rankings, Chinese banks accumulated for nearly one third (29.3%) of global banking profits in 2011. Three Chinese banks topped the Banker¿s profit table. During the banking reforms in China, the foreign subsidiary banks went on expanding their business in China, in terms of both operating institutions and total assets. By comparing the determinants of net interest margins of Chinese banks, we investigate to what extent the deregulation trends and foreign bank presence can affect the net interest margins of China¿s banking sector. In terms of the payment system in China, the domestic non-cash payment transactions have enjoyed the average 20.8% annual growth rate of card usage. The establishment of ChinaUnionPay (CUP) scheme in 2002 had increased the acceptance and diffusion of bankcards usage and non-cash payments. Meanwhile, the infrastructure of payment network also witnessed a noticeable improvement. My thesis contributes to the literature by investigating the diffusion pattern of non-cash payments in China including the impact of network effects, infrastructure improvement and market concentration. To my knowledge it is the first time that the diffusion pattern of the non-cash payment system of an emerging market, such as China. All of these investigations above have reflected that China is currently undergoing a massive social and financial transformation. In this thesis we investigate the Chinese banking and financial industry from the perspective of financial liberalization in the property and banking market and the financial innovation in the non-cash payment sector.