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Local Banks Merged to Shield Financial Risks

Caijing Magazine December 18, 2023

By NewsChina Updated Mar.1

Recent acquisitions among China’s local banks indicate a noteworthy shift in the country’s financial industry focus, transitioning from innovation to prioritizing risk prevention. In 2019, liquidity concerns raised by the Bank of Jinzhou and Baoshang Bank Ltd’s application of liquidation prompted increased scrutiny of smaller local financial institutions. Between 2004 and 2006, the central government fostered rural financial reform and innovation, enabling private and foreign investments and the establishment of microfinance organizations. The ensuing stimulus policies led to the opening of the first village bank in Sichuan Province in March 2007, with their numbers exceeding 1,600 in the following decade. However, the expansion halted in 2017 as China prioritized quality over quantity in economic growth. Presently, it is advised that acquisitions aimed at addressing stock risks should be pursued carefully to avoid triggering new crises.