Broadening ownership arrangements in the industry will facilitate risk management and mobilize market resources

The banking sector occupies a key position in China's financial system. The capital market in China is relatively underdeveloped and the banking system is the main source of domestic financing. The banking sector influences economic growth, poverty alleviation and the allocation of assets, hence it is critical to identify policies that encourage efficient bank operations.

The remarkable progress that China's banking industry has made in the last several decades has attracted a lot of attention around the world. The government has transformed the banking sector from a centralized and government-owned system to a more commercially driven system. The recapitalization and equitization of the four biggest wholly State-owned banks, namely the Bank of China, China Construction Bank, the Industrial and Commercial Bank of China and the Agricultural Bank of China, was one of the most recent and significant steps in moving bank restructuring forward. More importantly, the regulatory authorities have put more effort into regulating corporate governance according to international standards.