The profitability of commercial banks and their ability to provide services will have impacts in many respects. First, they are vital to welfare of the public, safety of savings of depositors and capital safety and profitability of investors. Second, they affect efficiency of funds allocation and in turn indirectly influence that of resource allocation in the whole economy.
Third, they entail transaction costs and efficiency of commodity trades and investment in the economy. It is the sole and specific role played by commercial banks that puts their reform in a particularly important niche in the whole reform of all financial enterprises. II. Perfecting governance structure of commercial banks is vital to success of the reform of commercial banks.