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Does financial regulation affect the profit efficiency and risk of banks? Evidence from China's commercial banks

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  • Lee, Tung-Hao
  • Chih, Shu-Hwa

Abstract

The goal of financial regulation is to enable banks to improve liquidity and solvency. Stricter regulation may be good for bank stability, but not for bank efficiency. This research aims to examine whether banks have met the CBRC's standard of financial regulations and explores how the previously implemented financial regulations have affected bank efficiency and risk in the past. In addition, we also explored the trade-off relationship between efficiency and risk. Unlike other studies, this study used bank assets as a classification standard from the financial risk and differential regulatory perspective.

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  • Lee, Tung-Hao & Chih, Shu-Hwa, 2013. "Does financial regulation affect the profit efficiency and risk of banks? Evidence from China's commercial banks," The North American Journal of Economics and Finance, Elsevier, vol. 26(C), pages 705-724.
    • Handle: RePEc:eee:ecofin:v:26:y:2013:i:c:p:705-724
    DOI: 10.1016/j.najef.2013.05.005
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    More about this item

    Keywords

    Financial regulation; Profit efficiency; Z-score; Large and small banks;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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