Because important sector for the stability of the

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Because important sector for the stability of the

Because the banking industry is a decisive component for the economy as we noticed during the global financial crisis, it now represents a key field for financial stability concern. The banking sector is an important determinant of the financial system in China; its efficiency plays an essential role in the country’s economic situation. Thus, it is interesting to study the structure of the banking system, the degree of concentration in the market in order to better investigate and analyze the factors that can contribute to the financial stability of the Chinese banking industry.? 3 ?The sub-prime crisis reminds us that, the banking sector remains a particularly important sector for the stability of the financial system. Indeed, this subject requires particular attention because the financial situation of banks heavily affects the performance of the whole economy. Measures of concentration and competition of the banking industry are of vital importance for banks understanding. Therefore, assessing the link between the market concentration of Chinese banking industry and the risk correlated is of extreme usefulness.The reason for focusing on risk in Chinese banking industry is that financial instability has become a major worldwide issue, the increase and recurrence of financial crises in the world and the consequences they have finally on the society and the world economy in general need deep analysis. The economic power of China and the significant role played by this country in the world’s financial system and economy make the analysis of the Chinese banking structure and the risk related a fundamental study.This paper aims to analyze and extend the connection between bank concentration and stability, particularly from the perspective of Chinese economy with bank-based financial systems and high level of concentration. The relationship between competition-concentration and stability in banking industry is relevant to assess the Financial instability risk. The main contribution of this thesis to the banking literature is to provide a comprehensive analysis of the Chinese banking sector about the topics of bank size efficiency, risk and concentration, large banks behaviors with the “too big to fail” theory. More precisely, we examine in particular the consequences of a concentrated Chinese banking industry on financial stability. Overall, our focus on the Chinese banking industry enables us to investigate important factors affecting the link between bank concentration and stability.

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