TY - JOUR
T1 - Bank Performance in China
T2 - A Perspective from Bank Efficiency, Risk-taking and Market Competition
AU - Fang, Jianchun
AU - Lau, Chi Keung
AU - Lu, Zhou
AU - Tan, Yong
AU - Zhang, Hua
PY - 2019/9/1
Y1 - 2019/9/1
N2 - The current paper contributes to the empirical literature on bank profitability by testing the joint-impact of different types of risk, competition in different banking markets and different types of efficiency on bank profitability using a sample of Chinese commercial banks over the period 2003-2017. In particular, we fill in the gap of the empirical studies by examining the impact of efficiency on profitability when banks undertake different levels of risk-taking behaviour and face different degrees of competition. The results show that competition in the Chinese banking markets (deposit market, loan market and non-interest income market) is stronger over the period 2003-2005 and also 2014-2017. In addition, it is found that bank size, cost efficiency, profit efficiency and inflation are significantly related to bank profitability. Finally, we find that the positive impact of cost efficiency on profitability is stronger when banks undertake higher levels of risk and face more competition.
AB - The current paper contributes to the empirical literature on bank profitability by testing the joint-impact of different types of risk, competition in different banking markets and different types of efficiency on bank profitability using a sample of Chinese commercial banks over the period 2003-2017. In particular, we fill in the gap of the empirical studies by examining the impact of efficiency on profitability when banks undertake different levels of risk-taking behaviour and face different degrees of competition. The results show that competition in the Chinese banking markets (deposit market, loan market and non-interest income market) is stronger over the period 2003-2005 and also 2014-2017. In addition, it is found that bank size, cost efficiency, profit efficiency and inflation are significantly related to bank profitability. Finally, we find that the positive impact of cost efficiency on profitability is stronger when banks undertake higher levels of risk and face more competition.
KW - interest rate liberalization
KW - bank competition
KW - bank profitability
KW - China
U2 - 10.1016/j.pacfin.2019.06.011
DO - 10.1016/j.pacfin.2019.06.011
M3 - Article
VL - 56
SP - 290
EP - 309
JO - Pacific Basin Finance Journal
JF - Pacific Basin Finance Journal
SN - 0927-538X
ER -
