The de facto pattern of Chinese bank insolvency: Discrepancies between law and reality

This article offers the first in-depth analysis of the gap between China’s legal framework and its practice in judicial bank insolvency proceedings. By examining recent cases, it identifies consistent patterns in how such proceedings are handled and reveals critical weaknesses in the current legal regime, including regulatory gaps and legal ambiguities that impede effective bank resolution. The study also investigates the influence of administrative powers, distinguishing between their appropriate application and instances of misuse. Based on these findings, the article proposes policy recommendations to enhance the legal framework, clarify the roles of judicial and administrative authorities, and promote a fairer and more effective insolvency process for banks in China.