Abstract
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.
| Original language | English |
|---|---|
| Pages (from-to) | 223-236 |
| Number of pages | 14 |
| Journal | Global Finance Journal |
| Volume | 35 |
| Early online date | 12 Dec 2017 |
| DOIs | |
| Publication status | Published - Feb 2018 |
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Profiles
Aaron Tan
- Department of Accounting, Finance and Economics - Senior Lecturer in International Business
- Northern Productivity Hub - Member
- Huddersfield Business School
Person: Academic
Cite this
Tan, Y., & Floros, C. (2018). Risk, competition, and efficiency in banking: Evidence from China. Global Finance Journal, 35, 223-236. https://doi.org/10.1016/j.gfj.2017.12.001