| Abstract: | The development of the banking sector has been one of the primary vehicles for stimulating the economic growth of China since the late 1970s. This paper presents, first, an overview of the institutional structure of the Chinese banking system, and second, an analysis of the development process of commercial bank regulations. With reference to international experience, the paper argues that several institutional problems have posed major challenges to the effective implementation of the promulgated bank regulations. These problems include: the impossibility for state‐owned enterprises (SOEs) to go bankrupt, the strong influence of local governments on banks’ operation, and the lack of an effective enforcement mechanism. |
