China’s banking reform: An assessment of its evolution and possible impact

The Chinese banking system, characterized by massive government intervention, poor asset quality and low capitalization, has started a reform process based on three main pillars: (i) bank restructuring, through the cleaning-up of non-performing loans and public capital injections, particularly in the four largest state-owned banks; (ii) financial liberalization, with the gradual flexibilization of quantity and price controls, the opening-up to foreign competition and cautious steps toward capital account liberalization; and (iii) strengthened financial regulation and supervision, coupled with efforts to improve corporate governance and transparency. Although the reform is still ongoing, our preliminary assessment indicates that changes are needed for the reform to be fully successful. Asset quality has improved, particularly in the recapitalized banks, but there is a high risk of a new build-up of non performing loans. Capitalization has increased in the largest banks, as a consequence of the government capital injections, but it generally remains low and profitability has fallen even further. China’s huge financing needs, to maintain high economic growth, and its commitment to fully open up its banking system to foreign competition urgently require a more comprehensive and time-bound strategy, with a long-term vision of the desired structure of the Chinese banking system. Bank recapitalization should be completed immediately, not only to ensure bank soundness, but also to increase profitability, which could be affected negatively as competition increases with full financial liberalization. Bank recapitalization, however, needs to be accompanied by a radical improvement in corporate governance, which would clearly be facilitated by a change in the property structure.Chinese financial system, financial reform, bank restructuring, financial liberalization, bank regulation and supervision.

A polymorphism at the 3'-UTR region of the aromatase gene defines a subgroup of postmenopausal breast cancer patients with poor response to neoadjuvant letrozole

<p>Abstract</p> <p>Background</p> <p>Aromatase (<it>CYP19A1</it>) regulates estrogen biosynthesis. Polymorphisms in <it>CYP19A1 </it>have been related to the pathogenesis of breast cancer (BC). Inhibition of aromatase with letrozole constitutes the best option for treating estrogen-dependent BC in postmenopausal women. We evaluate a series of polymorphisms of <it>CYP19A1 </it>and their effect on response to neoadjuvant letrozole in early BC.</p> <p>Methods</p> <p>We analyzed 95 consecutive postmenopausal women with stage II-III ER/PgR [+] BC treated with neoadjuvant letrozole. Response to treatment was measured by radiology at 4^thmonth by World Health Organization (WHO) criteria. Three polymorphisms of <it>CYP19A1</it>, one in exon 7 (rs700519) and two in the 3'-UTR region (rs10046 and rs4646) were evaluated on DNA obtained from peripheral blood.</p> <p>Results</p> <p>Thirty-five women (36.8%) achieved a radiological response to letrozole. The histopathological and immunohistochemical parameters, including hormonal receptor status, were not associated with the response to letrozole. Only the genetic variants (AC/AA) of the rs4646 polymorphism were associated with poor response to letrozole (p = 0.03). Eighteen patients (18.9%) reported a progression of the disease. Those patients carrying the genetic variants (AC/AA) of rs4646 presented a lower progression-free survival than the patients homozygous for the reference variant (p = 0.0686). This effect was especially significant in the group of elderly patients not operated after letrozole induction (p = 0.009).</p> <p>Conclusions</p> <p>Our study reveals that the rs4646 polymorphism identifies a subgroup of stage II-III ER/PgR [+] BC patients with poor response to neoadjuvant letrozole and poor prognosis. Testing for the rs4646 polymorphism could be a useful tool in order to orientate the treatment in elderly BC patients.</p

What explains the low profitability of Chinese banks?

This paper analyzes empirically what explains the low profitability of Chinese banks for the period 1997-2004. We find that better capitalized banks tend to be more profitable. The same is true for banks with a relatively larger share of deposits and for more X-efficient banks. In addition, a less concentrated banking system increases banks profitability, which basically reflects that the four state-owned commercial banks –China’s largest banks- have been the main drag for system’s profitability. We find the same negative influence for China’s development banks (so called Policy Banks), which are fully state-owned. Instead, more market oriented banks, such as joint-stock commercial banks, tend to be more profitable, which again points to the influence of government intervention in explaining bank performance in China. These findings should not come as a surprise for a banking system which has long been functioning as a mechanism for transferring huge savings to meet public policy goals.China, bank profitability, bank reform