Despite fundamental market reforms, the Chinese financial system has remained a mixed system. From the perspectives of the mainstream doctrines of financial liberalization, this system is easily judged to be entailing serious allocative inefficiencies. Nevertheless, from alternative theoretical...

The neoclassical approach focuses its attention on the prudence of individual banks. In its objective of achieving allocative efficiency, it seeks to prevent market failures caused by the operations of the banks. In this light, it is contended that China should further its market reforms in the...