THE SPECIFICS OF CHINESE BANK REGULATION

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Abstract

The present paper aims to propose an explanation for the rationale behind the current banking regulatory arrangement in China. A now stable and relatively healthy banking system emerged largely unscathed from the financial crisis without relying much on recognized international best practices in bank supervision. China combines a strong regulatory hand together with a capital adequacy requirements stick, without much intervention of foreign or private institutions in the larger sense of the term. After an in-depth review of the Chinese framework we recognize that it is exactly this lip service to private monitoring mechanisms on top of restrictive regulators that allows for stability and growth - at least for now. China uses Chinese supervision as the core and western regulatory instruments as useful add-ons - a manner similar to the catch phrase used over a century ago to rejuvenate China.

Keywords: Bank Regulation, China, Bank Supervision

How to cite this paper: Cousin, V. (2012). The specifics of Chinese bank regulation. Journal of Governance and Regulation, 1(1), 36-54. https://doi.org/10.22495/jgr_v1_i1_p4