Caixin OnlineFinance & EconomicsTop Stories Finance Shadows of Doubt on Banking Profits
04.06.2012 19:16

Shadows of Doubt on Banking Profits

How have banks extracted windfall gains in a relatively tight credit environment? Among many reasons, the large-scale expansion of banking activity stands as a primary factory
By Zeng Gang
 

The onset of public scrutiny over bank profits only intensifies with each issuance of annual reports from China's commercial banks. A hard look at the figures shows why the criticisms of ill-gotten gains and monopolistic activities are fundamentally well-grounded.

China's interest rates are still entirely determined by the government and a huge chunk of banking profits flow from interest spreads. The weakening of credit controls only plays a small role in massive bank profits as this was a steady phenomenon since the start of market reforms.

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