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The IPO of Industrial and Commercial Bank of China and the 'Chinese Model' of Privatizing Large Financial Institutions

Author

Listed:
  • Allen, Franklin

    (University of PA)

  • Shan, Susan Chenyu

    (University of Hong Kong)

  • Qian, Jun

    (Boston College)

  • Zhao, Mengxin

    (University of Alberta)

Abstract

We examine the reform and privatization process of the Industrial and Commercial Bank of China (ICBC) and its IPO in both the Hong Kong and Shanghai Stock exchanges in October 2006. The Chinese government retains majority ownership stake of ICBC, while foreign institutional investors hold minority stakes. Such an ownership structure of a company listed in exchanges outside mainland China represents how the government privatizes its financial intermediation sector, which was dominated by large and inefficient state-owned institutions. The largest Chinese banks, as a group, outperformed their counterparts from other emerging and developed markets before and during the 2007-2009 financial crisis. We argue that the 'Chinese model' of privatizing and managing large financial institutions can be used in other developing countries.

Suggested Citation

  • Allen, Franklin & Shan, Susan Chenyu & Qian, Jun & Zhao, Mengxin, 2011. "The IPO of Industrial and Commercial Bank of China and the 'Chinese Model' of Privatizing Large Financial Institutions," Working Papers 11-63, University of Pennsylvania, Wharton School, Weiss Center.
    • Handle: RePEc:ecl:upafin:11-63
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    File URL: http://fic.wharton.upenn.edu/fic/papers/11/11-63.pdf
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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