The Relationship between Modern Financial Crisis and Banking System Fragility

Since 1990's, the financial fluctuations occurring in the emerging financial markets are typical of financial crises in modern times. That is to say, the combination of currency crisis and banking crisis led to higher interest rate, capital flight and the contraction of real economy. In each country which has experienced financial crisis does exist the (non-perfect) banking system before the crisis. So all of them face the problem of banking reconstruction. The banking fragility does exist in China's banking system. Improving the competitiveness of China's banking industry is much more important than financial liberalization since we are now facing a new international financial environment.