The Precious Metals Holdings of Chinese Commercial Banks

31 Pages Posted: 19 Sep 2019

See all articles by Dirk G. Baur

Dirk G. Baur

University of Western Australia - Business School; Financial Research Network (FIRN)

Md Zakir Hossain

UWA Business School

Anna Retnawati

The University of Western Australia

Sirimon Treepongkaruna

The University of Western Australia; Financial Research Network (FIRN)

Jing Yu

The University of Sydney; Financial Research Network (FIRN)

Date Written: September 12, 2019

Abstract

Despite gold having no official role in the global monetary system, major central banks still hold large gold reserves and emerging country central banks such as the Peoples Bank of China (PBOC) have significantly increased their gold holdings in recent years. Interestingly, Chinese commercial banks have increased their gold and precious metals holdings by even more than the PBOC. This paper exploits the relative transparency of Chinese commercial banks’ precious metals holdings and gold import licenses and finds that the holdings improve bank resilience, increase trading income and reduce interbank connectedness. The results provide first evidence for the special role of gold from a commercial bank’s perspective.

Keywords: gold, China, commercial banks, import licenses, gold swaps, BIS, trading income, interconnectedness, systemic risk

JEL Classification: G11, G15, G21, G28

Suggested Citation

Baur, Dirk G. and Hossain, Md Zakir and Retnawati, Anna and Treepongkaruna, Sirimon and Yu, Jing, The Precious Metals Holdings of Chinese Commercial Banks (September 12, 2019). Available at SSRN: https://ssrn.com/abstract=3452378 or http://dx.doi.org/10.2139/ssrn.3452378

Dirk G. Baur (Contact Author)

University of Western Australia - Business School ( email )

School of Business
35 Stirling Highway
Crawley, Western Australia 6009
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Md Zakir Hossain

UWA Business School ( email )

School of Business
35 Stirling Highway
Crawley, WA Western Australia 6009
Australia
(+61 8) 6488 2780 (Phone)

HOME PAGE: http://www.business.uwa.edu.au/

Anna Retnawati

The University of Western Australia ( email )

35 Stirling Highway
Crawley, Western Australia 6009
Australia

Sirimon Treepongkaruna

The University of Western Australia ( email )

35 Stirling Highway
Crawley, Western Australia 6009
Australia
+61864887853 (Phone)
+61864881086 (Fax)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Jing Yu

The University of Sydney ( email )

University of Sydney
Sydney, NSW 2006
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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