Financial monopoly dispute
The research on the degree of banking competition mainly involves three aspects: the judgment of the degree of banking competition, the correlation between the degree of banking competition and efficiency, and the relationship between the degree of banking competition and financial stability.
Most studies show that most banks in developed countries are in a monopolistic competition environment. SCP hypothesis holds that there is a causal relationship among market structure, market behavior and market performance, and market structure affects the strategic choice of enterprises, and then affects the efficiency of enterprises.
If the market concentration is high, a few big banks can form collusion at low cost, consolidate their monopoly position and obtain monopoly profits by restricting competitors' entry. For example, Smirlock (1985) thinks that monopoly leads to high loan interest rate, low deposit interest rate and various unreasonable charges. At the same time, the market concentration is high, and several big banks have strong influence on the government.
However, many scholars have questioned this. Demsetz (1973) and Lambson (1987) of Chicago School believe that it is the high efficiency of financial institutions that leads to the concentration of financial markets, and these high-efficiency enterprises have gained high market share by virtue of their own management and technical advantages, which leads to the increase of industry concentration, rather than the high efficiency of financial enterprises brought about by market concentration.
Whether bank monopoly is beneficial to the stability of the whole financial industry is another important issue that economists pay attention to. Max (Marcus, 1984), Kohler (Keeley, 1990), Demsetz (Demsetz, 1996), carret and Hartman (Carletti &: Hartmann, 2003) and others believe that competition. Therefore, appropriate monopoly is conducive to the stability of the financial system. The empirical study of Jimenez (2007) also supports the above viewpoint, and he found that higher competition is often associated with higher-risk lending behavior.
But there are also different voices. Bodie and Danny Crewe (Boyd &; De Nicolo, 2005) proposed that excessive monopoly power allowed banks to charge borrowers too high interest rates, which made repayment more difficult, and encouraged banks to take higher-risk market operations, which led to an increase in financial market risks. Bodie (Boyd, 2006), Denicrewe and Luc Ainova(De Nicolo &；; Loukoianova, 2006) found through his own research that the risk of bank failure increases with the increase of market concentration.
Chinese scholars have gradually realized the importance of banking monopoly and have done a lot of research work, but most of the research objects are the whole country and urban areas. Yu Liangchun and Ju Yuan (1999) made an empirical analysis of the market structure of China's banking industry from three aspects: market share, market concentration and entry barriers. Sun Tianqi (2002) put forward the "financial organization structure dominated by oligarchs and cooperative competition"; Qin Wanshun and Ouyang Jun (200 1) studied the market structure, efficiency and performance of commercial banks in China. Iridium et al. (2005) and Cao (2009) used the methods of market concentration, Panzar-Rosse model and Lerner index to measure the degree of financial monopoly in China and other provinces.
Northwest financial sample
Four state-owned banks and rural credit cooperatives (including rural cooperative banks and rural commercial banks) in northwest China 100 counties were selected as the research objects, and 100 basic observation samples were formed, and the research interval was selected from 2006 to 20 10. Although not covering all local banking financial institutions, the above five institutions account for a relatively large proportion in China's county financial system, so they can reflect the overall situation of banking development in all districts and counties.
structural analysis
The first is the analysis of market concentration. Using the calculation formula of market concentration index, this paper calculates the CR5 (market concentration or market share of the five major banks) of deposits and loans in 2006 to 20 10/0 counties. It is found that in the past five years, the CR5 index of county loans has remained around 90%, while the CR5 index of deposits has declined from 70% in 2006.
It should be pointed out that CR5 calculates the market share of the five major banks, but some counties may have a higher degree of monopoly, because there may actually be only three banks: rural credit cooperatives, county branches of a state-owned bank and county branches of the Postal Savings Bank. CR3 (the market share of the top three banks) in these counties is more than 90%, and the loans issued by the postal service are basically negligible, so CR2 (the loan share of the top two banks) of course also has some county banking institutions that are relatively complete. Agricultural development bank, industry, agriculture, China, construction, postal savings and city commercial banks all have county branches, as well as village banks and loan companies, and the competition is relatively full.
The second is the market share analysis of sub-institutions and categories. In terms of institutions, from 2006 to 2008, the loan market share of county rural credit cooperatives increased significantly, while the loan market share of county branches of the four major state-owned banks showed a significant downward trend. After 2008, the loan market share of rural credit cooperatives remained at around 60%, which was significantly higher than the county branches of the four major state-owned banks.
(B) unstructured analysis-public relations model
PR model is an unstructured industry competition model proposed by Panzar and Rosse( 1987), also known as H statistical method. This method assumes that enterprises will adopt different pricing strategies for the change of input prices under different market structures. Therefore, we can judge the degree of competition in the market of the enterprise by analyzing the elasticity of the total income of the enterprise to the input price. This model has been widely used to measure the degree of monopoly in the banking industry. The calculation formula is as follows:
Among them, Wi is an M-dimensional vector representing the input price, representing the income of the I-th bank in the long-term equilibrium, and the output of this bank is loans, securities, etc. The investment of banks is deposits, human capital and capital. In the monopoly market, the change of input price causes the change of marginal cost of banks, which in turn leads to the change of income. Banks will formulate supply price strategies according to the prices of various input factors determined by different market structures. Therefore, we can judge the competitive situation of the bank's market by analyzing the elasticity of the total income and input cost of the bank. The criterion is that, on the whole, the greater the H value, the higher the degree of competition. Specifically, when H (3) is the reason for the high degree of county financial monopoly.
The reasons for the high degree of banking monopoly in northwest China are as follows: 1. The entry threshold restricts the entry of private capital and then goes underground, and private lending in some counties is more active; 2. The economy in underdeveloped areas is inactive, the efficiency of banks is low, and the background of market-oriented transformation and joint-stock reform of several major banks in recent 10 years has led to the abolition of many inefficient outlets in commercial banks, including provincial capitals, including the withdrawal of outlets from counties and even underdeveloped cities in underdeveloped areas, and joint-stock banks are reluctant to enter on a large scale. At the same time, although some county branches of commercial banks exist, they only absorb deposits in the county and rarely issue loans. The loan-to-deposit ratio of some banks is less than 2%. An extreme example is that deposits have increased every year in the past five years, but loans have always been 0; 3. In some underdeveloped areas, the county financial ecological environment is poor and the operating environment is not ideal, which leads to higher risks for banks in these areas. As a result, the market institutions of county banks are single in type and the degree of competition is low, which is obviously lower than the national level.
Access to county financial markets needs to be liberalized.
(A) Northwest county banking market is basically in a state of monopoly competition and partial monopoly.
The 65,438+000 county-level banks surveyed show a high degree of oligopoly in terms of market concentration and market share ratio, and the H value of county-level banks calculated based on PR model is also consistent with the research conclusions of market concentration and market share ratio. The H value of most counties is close to 0, showing the characteristics of monopolistic competition and monopoly, and the H value of some counties is less than 0, reaching a monopoly level.
(2) The monopoly degree of county banking is higher than the national average, and the competition is insufficient.
The research results of Iridium in Zhao Zi (2005), Huang Juan (2007), Meggie Yu (2009) and Zhao Yulong (2009) show that the overall competition of China's banking industry is monopolistic competition, and the degree of monopoly gradually weakens with the development and marketization of China's banking industry. The H-value index of China's banking industry is calculated from 0.4 to 0.7, and the market is characterized by monopolistic competition but local competition. However, the H-value of county banking in Northwest China calculated in this paper is obviously lower than the national level, that is to say, the monopoly degree of county banking in western China is higher than the national average level, and the competition is insufficient.
(3) On the premise of strengthening supervision and controlling risks, the market access of county-level financial institutions will be steadily liberalized to improve the degree of competition in county-level finance.
In the long run, increasing competition is beneficial to the healthy development of the whole industry. Therefore, under the premise of strengthening supervision and effectively preventing risks, the market access of county financial institutions should be steadily liberalized to attract private capital. Encourage rural credit cooperatives to introduce high-quality private capital, relax the establishment conditions and shareholding ratio of village banks, and actively guide the development of microfinance companies; Develop community-based financial institutions that serve small and micro enterprises and local residents, and encourage the establishment of new grassroots financial organizations. At the same time, cultivate a good financial ecological environment and policy environment, guide commercial banks to set up branches in qualified counties, improve the degree of financial competition in counties, rationalize the allocation mechanism of financial resources, and improve allocation efficiency.
Project Consultant: Zhang Jianhua; Project leader: Guo Xinming; Theme writing: Zhao Xuan Qian Hao