• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

The chinese banking system compared to the british banking system

Extracts from this document...

Introduction

The Chinese banking system compared to the British banking system. The British and Chinese banking systems were some of the first banking systems in the world. The Chinese systems date back song dynasty. The British system much like the Chinese has had many changes over the years due to the ever-changing ways of the two very diverse economies. In this essay I aim to highlight the differences in both the systems in the way their financial institutions operate and I am going to mainly focus on role of the two countries central banks for Britain the Bank Of England and for China The People's Bank Of China. The banking system of China was very different to what it is now. During the 18th century, most banks were run my dynasties and were on a small scale in the big metropolis cities. Due to the ever-growing size of china's population, economy, and the increase in foreign trade international banks soon began to emerge on Chinese soil. British banks and French banks were part of the first few followed soon by Russian banks who had similar communist methods to china after 1949. How ever, the biggest change occurred in 1949 after the Chinese civil war. The Peoples Bank of China was appointed as the central bank of china and has newer rules and responsibilities appointed to it. ...read more.

Middle

(Heffernan, S 2005 Modern banking Jonh Wiley & Sons pg 305) The lack of regulation and control of private banks or too much regulation as others would argue and not getting the right balance of regualtion led to many failures in the UK. An example would be the small bank failures and liquidity problems they faced during 1991-1993. (Heffernan, S 2005 Modern banking Jonh Wiley & Sons) Britian saw a great rise in foreign investment and was going through a boom. With so many small and medium sized instiutions opening up specialising in property. Institutions would often lend out up to 125% mortgages which left the lender ad borrower with negative equity as time went on the loan book got greater then the deposits.( Heffernan, S 2005 Modern banking Jonh Wiley & Sons) The decline and speculative concerns grew and as a result the values of assets droped. As the small instituions played no role on the main economy as there was so many of them, together all of them collapsing would have a great impact. The bank of england had to step in to finance and bail out over 40 small firms from going bank rupt. The Bank of England did step in but it was a too late. Banks were given the option to either close down or increase their liquidity or decrease loans. ...read more.

Conclusion

In conclusion there is reason to believe that although the Bank Of Englands model is the base model for many other central banks around the world its lack of regulation and control is questionable. It is the bank of the government and the lender of last resorts. Comparing the chinese central bank and the responsibilities it holds and shows that the chinese model of banking where the state is controlling the majority of it is more succesfull in terms that there are more closely monitored as they are open to scrutiny if they show any signs of failure and as a result could loose their position as government. How ever some might argue that is so much state control and ownership that good. The British banking industry is booming with firms and as a result competition is tight resulting in the consumer getting a better deal where as the consumer in china is much worse off due to the lack of competition. Both economies are very different in the way they operate how ever they are both able to boast one similarity and that is they are still key players on the world stage in terms of their financial instituions and are still able to maintain their importance to the world economy as a whole. Bibiliography: 1. http://www.bankofengland.co.uk/about/history/ 2. https://www.bankofengland.co.uk/publications/workingpapers/wp139.pdf p16 p23 3. http://www.pbc.gov.cn/publish/english/966/index.html 4. Heffernan, S 2005 Modern banking Jonh Wiley & Sons 305p-315p ?? ?? ?? ?? 09322352 Bharat Patel ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Macroeconomics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related University Degree Macroeconomics essays

  1. Discuss the bread industry in Malaysia - growth, revenue and pricing.

    a loaf of Gardenia white bread cost RM 2.30 In peninsular Malaysia but in East Malaysia, Sabah and Sarawak, selling price is relatively as cost around Rm2.80 for the same loaf of white bread. Based on the pricing method we mentioned above, because of the price increased in input therefore will increase in selling price of output.

  2. Analysis of external debt: Romania vs Bulgaria

    The external debt of Bulgaria fluctuated between 2000 and 2004 between relatively between relatively close parameters, continuing with a growth tendency between 2005 and 2008,reaching it's peack in 2008, when the amount of external debt was more than double that of 2005.

  1. Welfare Economics. In this essay I will be examine the arguments for and ...

    Production efficiency would be attained when all possible Pareto improvements have been exhausted (Illustrated below). Xb1 B Xb2 Xa1 good1 At this point the isoquants of the two firms are tangential. We know that the slope of isoquant measures MRTSKL.

  2. The Global Economic Crisis. The present project analyses different approaches of the crisis ...

    in an interview for a newspaper: "We have responded to the crisis in a positive and not defensive manner, seeking new ways to attract a greater number of clients. We have relied on aggressive promotions, our own brand which includes over 1000 articles (a similar quality being at least 20% cheaper compared to national brands)

  1. Economics in theory. The main purpose of this report is to explain a ...

    Demand function demonstrates a kind of one-on-one relation between quantity and price, which can also be displayed by demand curve as exhibited below. In the above diagram, the horizontal axle stands for the product quantity and the vertical axle stands for the product price.

  2. Communication Sector in Pakistan

    Added competition from Telenor and Warid has provided real momentum for the growth of Pakistani mobile market. These two companies have given an impetus in the industry for lower tariffs, expanded networks, customized packages and high tech services.

  1. The Impact of Domestic Policies on UK Investments & Exports During the Financial Crisis ...

    (Chart 7.4a). As volatility in inflation fell during 2009 to 2010, volatility in GDP growth also began to fall (9.786 to 6.313), indicating that a decline in prices may have begun to contribute to stabilising economic growth in the UK.

  2. A COMPARITATIVE ANALYSIS OF WHOLESALE PRICE INDEX AND CONSUMER PRICE INDEX IN THE INDIAN ...

    Subbarao said in August 2009. ?The Reserve Bank looks at all the measures of inflation, both overall and disaggregated components, in conjunction with other economic and financial indicators, to assess the underlying inflationary pressures.? Finance Ministry counters it saying that in India there are 4 CPI indices (CPI Industrial Workers,

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work