The relationship between bank competition and bank stability has gained considerable attention from both policy maker and academics,especially after the 2008-09 global financial crisis.This paper investigates this issue in the context of Chinese banking over the period 1995-2010.Chinese government has implemented gradual banking reforms that have resulted in fundamental structural changes in the sector with significant implications in banking competition.One of the main goals of banking reform is to foster banking competition via deregulation,which in turn promotes bank performance and improve bank stability.