L Lu, ‘Private Banks in China: Origin, Challenges and Regulatory Implications’ in BFLR (2016), Vol. 31(3)

Bank-of-China

In July 2016, Dr Lerong Lu published an article in the Banking & Finance Law Review, investigating China’s latest financial reform to open up its banking sector to private investors. For a long time, China’s banking sector has been dominated by state-owned lenders, such as the “Big Four”: the Bank of China (BOC), the China Construction Bank (CCB), the Agricultural Bank of China (ABC), and the Industrial and Commercial Bank of China (ICBC). As a result, it has been difficult for private-owned businesses to borrow a loan from state banks which are often reluctant to lend to what they perceive as risky start-ups. Recently, the Chinese regulator has loosened the licensing requirement for new banks, giving rise to a new group of privately funded lenders, which has a profound impact on the country’s financial industry. The article has also discussed about relevant regulatory issues like the newly introduced deposit insurance.

Title:  Private Banks in China: Origin, Challenges and Regulatory Implications
Abstract: In 2015, China started allowing qualified investors to set up privately funded commercial banks, which might be the largest change in China’s state-dominated banking sector in the recent decade. The privately-owned banks are said to break the monopoly of existing state-owned banks, as well as providing more loans to China’s money-starved entrepreneurs who are underserved by state-owned lenders. This article aims to introduce the latest development of privately-owned banks in China, and analyse some potential challenges faced by these newly established banks and the relevant regulatory issues.
Publisher: Thomson Reuters
Citation: Lerong Lu, ‘Private Banks in China: Origin, Challenges and Regulatory Implications’ Banking & Finance Law Review (2016), Vol.31(3) , 585-599.
Key Words: Banking, China, Private Banks, Deposit Insurance

Download this paper from Academia.edu

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