Emergence of Modern Banks

The emergence and rapid expansion of modern Chinese banks has attracted scholars’ attention since the early 1930s. From the Japanese invasion of China in 1937 until the later 1970s, however, the study of modern Chinese banks was relatively neglected, particularly in non-Chinese languages. After China reopened to the world, numerous collections of archived materials have been published, which provide rich primary sources for studying the emergence of modern Chinese banks and their role in pre-1949 China. Based on these rich resources, scholars have been able to explore the changes in China’s complex monetary system up to its unification in the middle 1930s, describe the history of almost every single principal bank that existed before 1949, and analyze the role that modern banks played in contemporary Chinese financial markets and overall economy as well as the relationship between modern banks and Chinese governments. Different theories and opinions were advanced to explain the causes leading to the rise and fall of modern banks in China, and the impact this had upon the Chinese economy before 1949. For a long time, a dominant and prevailing claim among scholars was that the expansion of modern Chinese banks relied solely on modern banks’ speculation on government bonds. It hurt, rather than aided, overall Chinese economic development. Other scholars advanced a more positive theory, arguing that the most important factor leading to the expansion and prosperity of modern Chinese banks was the entrepreneurship of a group of Chinese prominent bankers who introduced significant reforms in their business practices and management methods. Under this theory, the expansion of the modern banking system helped, directly or indirectly, modern Chinese economic development.