1. Introduction

China, one of the fastest-growing countries in transition, is leaping from its socialist past to its current market-oriented environment, making an economic miracle in history with an average annual growth rate of about 9% over nearly four decades (1978–2016). In 2010, China overtook Japan and became the second largest economy in the world. However, much of this near double-digit-type growth experience in China was achieved without a modern financial sector in place. Banking reform was regarded as a failure when mounting non-performing loans (NPLs) came to surface in 1999, and starting only in 2005, the largest Chinese banks entered the capital markets shattering the previous market capitalization records for financial intermediaries in the initial offering markets. While China’s economy surpassed the European Union’s economic bloc in 2011, its banking system overtook the Eurozone and became the world’s largest banking sector in terms of total assets five years later in 2016. As of the end of 2016, China’s banking assets reached $33 trillion, which is higher than that of $31 trillion for the Eurozone, more than double that of $16 trillion for the United States, and more than four times that of $7 trillion for Japan (www.​ft.​com).