As a rule, banks under Chinese management suffer from either extreme concentration of business, or wide diffusion of it. The older native banks as a rule have had rarely any branches outside of the places they operated in. The newer ones want to cover too wide a field. It is not very advantageous to a bank to have to deal through another bank when a business, within a small radius of twenty miles or so, has to be transacted. So long as there is sufficient capital, it is more economical for a bank to operate in places within a fairly reasonable distance from the head office. Lots of discounts, commissions and exchange of bullion or coin could be made cheaper or even obviated by such means. That means, of course, that the banks must have a fairly large capital in order to have adequate reserves at all the places, and adequate capital to conduct business and inspire confidence in the public. It is waste of energy as also money to have a bank with a small capital, and that only in one place.

On the other hand a tendency of the foreign-educated Chinese to imitate developments in foreign countries is even more harmful. To have a large number of branches at far distant places and to operate successfully and profitably, a bank needs an enormous amount of capital, which China is unable to concentrate. Moreover, even in European countries such developments are being looked upon with disfavour. Some of the big European banks have overseas branches, which follow, or are supposed to follow, trade. In any case, their capital is enormous, permitting them to venture on such pursuits. It would be no advantage to Chinese to encourage banks to cover too wide a field; for, even if they are successful, they would cut into the local banking business of each locality and thus generate hostility, which would prove of no good to the common weal.