TY - JOUR
T1 - Risk, competition, and efficiency in banking
T2 - Evidence from China
AU - Tan, Yong
AU - Floros, Christos
PY - 2018/2
Y1 - 2018/2
N2 - This paper tests the interrelationships among risk, competition, and efficiency in the Chinese banking industry between 2003 and 2013, with an efficiency-adjusted Lerner index and stability inefficiency as the indicators of competition and insolvency risk. The results show that Chinese commercial banks with higher efficiency have higher credit risk and insolvency risk, but lower liquidity risk and capital risk. Greater competition decreases credit risk and insolvency risk, but increases liquidity risk. Credit risk and insolvency risk are significantly and positively related to efficiency, while liquidity risk and capital risk are significantly and negatively related. Finally, lower liquidity risk decreases competition.
AB - This paper tests the interrelationships among risk, competition, and efficiency in the Chinese banking industry between 2003 and 2013, with an efficiency-adjusted Lerner index and stability inefficiency as the indicators of competition and insolvency risk. The results show that Chinese commercial banks with higher efficiency have higher credit risk and insolvency risk, but lower liquidity risk and capital risk. Greater competition decreases credit risk and insolvency risk, but increases liquidity risk. Credit risk and insolvency risk are significantly and positively related to efficiency, while liquidity risk and capital risk are significantly and negatively related. Finally, lower liquidity risk decreases competition.
KW - Chinese banking
KW - Competition
KW - Efficiency
KW - Risk
UR - http://www.scopus.com/inward/record.url?scp=85039453982&partnerID=8YFLogxK
U2 - 10.1016/j.gfj.2017.12.001
DO - 10.1016/j.gfj.2017.12.001
M3 - Article
VL - 35
SP - 223
EP - 236
JO - Global Finance Journal
JF - Global Finance Journal
SN - 1044-0283
ER -
