Banking Reform and Corporate Governance

Recent developments and problems of corporate governance in Chinese banks are reviewed. The central government has tried to improve corporate governance, but China still has a "market economy with socialist characteristics." Key industries, such as banking, are firmly controlled by the state, and their leaders are appointed by the state. The China Banking Regulatory Committee was established in 2003 to regulate and monitor banks, but transparency remains elusive in the banking industry. An effective system of corporate governance is necessary for the Chinese banking industry to gauge the success of the banking reform and to inspire market confidence.