Bank Performance in China: A Perspective from Bank Efficiency, Risk-taking and Market Competition

43 Pages Posted: 31 Mar 2017 Last revised: 20 Jul 2020

See all articles by Jianchun Fang

Jianchun Fang

Zhejiang University

Chi Keung Marco Lau

Teesside University

Zhou Lu

Tianijin Univesity of Commerce

Yong Tan

University of Huddersfield - Business School

Hua Zhang

Zhejiang University

Date Written: March 30, 2017

Abstract

The current paper contributes to the empirical literature in bank profitability by being the first piece of research innovatively uses Boone indicator to test the competition in different banking markets namely deposit market, loan market and non-interest income market and further examine their impacts on profitability using a sample of Chinese commercial banks over the period 2003-2013 under a Generalized Method of Moments (GMM) one-step system estimator. In addition, the current study comprehensively examines different types of efficiencies and risk of Chinese commercial banks and further evaluates their impacts on bank profitability. The results show that cost efficiency, profit efficiency and liquidity risk are significantly related to bank profitability in China. Finally, the results show that higher competitive deposit market increases the Net Interest Margin (NIM) of Chinese commercial banks.

Keywords: interest rate liberalization, bank competition, bank efficiency, bank profitability, China

JEL Classification: G21, C23

Suggested Citation

Fang, Jianchun and Lau, Chi Keung Marco and Lu, Zhou and Tan, Yong and Zhang, Hua, Bank Performance in China: A Perspective from Bank Efficiency, Risk-taking and Market Competition (March 30, 2017). Available at SSRN: https://ssrn.com/abstract=2943362 or http://dx.doi.org/10.2139/ssrn.2943362

Jianchun Fang

Zhejiang University ( email )

38 Zheda Road
Hangzhou, Zhejiang 310058
China

Chi Keung Marco Lau

Teesside University ( email )

Tees Valley
Middlesbrough
Middlesbrough, Middlesbrough TS1 3BX
United Kingdom

HOME PAGE: http://https://research.tees.ac.uk/en/persons/chi-lau

Zhou Lu

Tianijin Univesity of Commerce ( email )

Beichen District
Tianjin, Tianjin 300134
China

Yong Tan (Contact Author)

University of Huddersfield - Business School ( email )

Queensgate
Huddersfield, HD1 3DH
United Kingdom
+44(0)148447 3578 (Phone)

Hua Zhang

Zhejiang University ( email )

38 Zheda Road
Hangzhou, Zhejiang 310058
China

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
177
Abstract Views
1,106
rank
245,523
PlumX Metrics