中国的金融体系主要由国有银行主导，其数量是四家。由于不良贷款（NPL）数量的增加，这些银行表现不佳。这些不良贷款与国有企业（SEO）做出的错误的贷款决策有关（Allen et al，2011）。贷款是基于政治考虑而制定的，并且正在积累多年。如果将中国的金融体系与世界其他重要金融体系进行比较，可以清楚地看到，中国在微观和宏观两个层面上存在许多种不正常的行为。以英格兰，德国，法国和斯堪的纳维亚银行系统为样本，计算银行信贷对GDP的平均值，银行资产总额的成本，总价值与国内生产总值的比值以及市值对GDP的平均值，并将样本平均值与那些o中国（Prasad，2013）。中国银行信贷占GDP的比例为1.11，样本平均值为0.73。中国金融体系的银行资产总额成本为0.12，样本平均为0.03。与样本平均值0.27相比，交易与GDP比率的总值为0.11。中国市场资本总额与GDP比率为0.32，样本平均值为0.47。这些数字描绘了中国金融业面临的困境（Prasad，2013）。
Theories of finance literature are of the view the strong financial system of the country leads to generate higher economic growth rates in the country. Many of empirical evidences also support this argument by observing positive correlation among financial developments and economic growth (Chen, 2011). The case of China is unique in a sense that it is a counterexample to the findings of finance-growth literature as the financial system has many laggings but the economy is managing to grow at a fastest rate.
3.Characteristics of Chinese Financial System
The financial system of China is majorly dominated by state owned banks and these are four in number. These banks are performing poorly because of the increasing number of Non-performing loans (NPLs). These non-performing loans are associated with wrong lending decisions made by state owned enterprises (SEOs) (Allen et al, 2011). Loans are being made on the basis of political considerations and are being accumulated for many years. If the financial system of China is compared with other important financial systems of the world it can clearly be observed that China is characterized with many sorts of mal-functioning at both micro and macro levels. The sample of English, German, French and Scandinavian banking systems are taken and sample average of Bank Credit to GDP, Overhead costs to Bank Total Assets, Total value traded to GDP, and market capitalization to GDP is calculated and sample averages are compared with those o China (Prasad, 2013). Bank credit to GDP ratio in China is 1.11 and that of sample average is 0.73. Overhead cost to bank total assets ratio of Chinese financial system is 0.12 and that of sample is 0.03 on average. Total value traded to GDP ratio is 0.11 as compared to an average of 0.27 in sample. Market capitalization to GDP ratio of China is 0.32 and sample average is that of 0.47. These figures depict the miseries that are being faced by the Chinese financial sector (Prasad, 2013).