TY - JOUR
T1 - The impacts of risk-taking behaviour and competition on technical efficiency
T2 - Evidence from the Chinese banking industry
AU - Tan, Yong
AU - Anchor, John
PY - 2017/10/1
Y1 - 2017/10/1
N2 - This paper tests the impact of risk and competition on efficiency in the Chinese banking industry over the period 2003–2013. Comprehensive types of risk-taking behaviour are considered including credit risk, liquidity risk, capital risk, and insolvency risk. Competition is measured by the Lerner index. The results are cross-checked using an alternative econometric technique as well as an alternative competition indicator. The findings show that the technical and pure technical efficiencies of Chinese commercial banks are significantly and negatively affected by liquidity risk. They further show that greater competition precedes declines in technical and pure technical efficiencies of Chinese commercial banks. The results suggest that Chinese bank efficiency is significantly affected by bank diversification, banking sector development, stock market development, inflation and GDP growth rate. The findings also indicate that, compared to state-owned commercial banks, joint-stock commercial banks and city commercial banks have lower technical and pure technical efficiencies.
AB - This paper tests the impact of risk and competition on efficiency in the Chinese banking industry over the period 2003–2013. Comprehensive types of risk-taking behaviour are considered including credit risk, liquidity risk, capital risk, and insolvency risk. Competition is measured by the Lerner index. The results are cross-checked using an alternative econometric technique as well as an alternative competition indicator. The findings show that the technical and pure technical efficiencies of Chinese commercial banks are significantly and negatively affected by liquidity risk. They further show that greater competition precedes declines in technical and pure technical efficiencies of Chinese commercial banks. The results suggest that Chinese bank efficiency is significantly affected by bank diversification, banking sector development, stock market development, inflation and GDP growth rate. The findings also indicate that, compared to state-owned commercial banks, joint-stock commercial banks and city commercial banks have lower technical and pure technical efficiencies.
KW - Bank competition
KW - Bank risk
KW - Chinese banks
KW - Data envelopment analysis
KW - Technical efficiency
UR - http://www.scopus.com/inward/record.url?scp=85018757352&partnerID=8YFLogxK
U2 - 10.1016/j.ribaf.2017.04.026
DO - 10.1016/j.ribaf.2017.04.026
M3 - Article
AN - SCOPUS:85018757352
VL - 41
SP - 90
EP - 104
JO - Research in International Business and Finance
JF - Research in International Business and Finance
SN - 0275-5319
ER -
