Banking Reconstruction: Strategic groups, Organizational Performance and financial stability focusing on China banking sector

Breaking down the whole banking sector into strategic groups creates a possibility to forecast the banking sector earning in a more precise way and to provide a more precise assessment of stability of the financial system. With the open of financial market in China, the increased competition from foreign banks continues to erode the market-share of banks. This competition, along with the explosive changes in information technology, fuels the need for Strategic groups in banking sector in China. Our empirical research has been carried out on the basis of a cluster analysis with the use of Ward's algorithm. We try to identify strategic groups in the China banking sector and observe statistically significant differences in performance between banks belonging to different groups. The result shows that strategic groups in the Chinese banking sector can not be identified; the reform of banks in China still has a long way to go.