The Effect of Foreign Bank Entry on the Operational Performance of Commercial Banks in the Chinese Transitional Economy
AbstractThis article undertakes an empirical examination of the impact of foreign bank entry on the operational performance of the Chinese banking sector, placing particular emphasis on the unique features of China's banking industry as it undergoes the process of transformation. Pooled cross-section (banks) and time series data are employed in the empirical estimation, with the sample comprising 14 Chinese banks and the period 1996-2004. Fixed effects and random effects models are estimated. The empirical results for the whole sample show that the return on assets (ROA) for those Chinese banks that have foreign shareholders is, on average, lower than the ROA for banks that do not have foreign shareholders. The longer a bank has been in existence, the lower its ROA will be, the main reason for this being that the older Chinese banks tend to have accumulated a lot of 'legacy problems'. Non-interest income is found to have a negative impact on ROA, reflecting a continuing emphasis on traditional lending business. Moreover, an increase in the depth of foreign bank participation does not affect the operational performance of Chinese banks.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Taylor and Francis Journals in its journal Post-Communist Economies.
Volume (Year): 19 (2007)
Issue (Month): 3 ()
Contact details of provider:
Web page: http://taylorandfrancis.metapress.com/link.asp?target=journal&id=102230
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Cull, Robert & Soledad Martinez Peria, Maria, 2010. "Foreign bank participation in developing countries : what do we know about the drivers and consequences of this phenomenon?," Policy Research Working Paper Series 5398, The World Bank.
- Bin Liu, 2011. "The Effects of Public Listing on the Performance of Banks in China," Working Papers 072011, Hong Kong Institute for Monetary Research.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.