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Bank ownership and efficiency in China: what lies ahead in the world’s largest nation? Author info | Abstract | Publisher info | Download info | Related research | Statistics Berger , Allen N () (Federal Reserve Board)
Hasan , Iftekhar () (Lally School of Management,Rensselaer Polytechnic Institute, and Bank of Finland Research)
Zhou, Mingming
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China is reforming its banking system, partially privatizing and permitting minority foreign ownership of three of the dominant ‘big four’ state-owned banks. This paper seeks to help predict the effects of this change by analysing the efficiency of virtually all Chinese banks in the years 1994–2003. Our findings suggest the big four banks are by far the least efficient and foreign banks the most efficient while minority foreign ownership is associated with significantly improved efficiency. We present corroborating robustness checks and offer several credible mechanisms through which minority foreign owners can increase Chinese bank efficiency. These findings suggest that minority foreign ownership of the big four is likely to significantly improve performance.
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Paper provided by Bank of Finland in its series Research Discussion Papers with number
16/2007.
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Length: 47 pages
Date of creation: 10 Oct 2007Date of revision:
Handle: RePEc:hhs:bofrdp:2007_016Contact details of provider: Postal: Bank of Finland, P.O. Box 160, FI-00101 Helsinki, Finland Web page: http://www.bof.fi/en/tutkimus More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (Minna Valkama).
Keywords: foreign banks ; efficiency ; foreign ownership ; Find related papers by JEL classification: F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: M.K. Leung & T. Young & D. Rigby, 2003.
"Explaining the profitability of foreign banks in Shanghai ,"
Managerial and Decision Economics ,
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[Downloadable!]
Allen N. Berger & Iftekhar Hasan & Leora F. Klapper, 2004.
"Further evidence on the link between finance and growth: An international analysis of community banking and economic performance ,"
Finance
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[Downloadable!]
Other versions:
Berger, Allen N. & Hasan, Iftekhar & Klapper, Leora F., 2004.
"Further evidence on the link between finance and growth: An international analysis of community banking and economic performance ,"
Research Discussion Papers
8/2004, Bank of Finland.
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Policy Research Working Paper Series
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"Further evidence on the link between finance and growth: An international analysis of community banking and economic performance ,"
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[Downloadable!] Allen N. Berger & Iftekhar Hasan & Leora F. Klapper, 2003.
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"Problem loans and cost efficiency in commercial banks ,"
Finance and Economics Discussion Series
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Allen N. Berger & Robert DeYoung, 1995.
"Problem Loans and Cost Efficiency in Commercial Banks ,"
Center for Financial Institutions Working Papers
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Proceedings ,
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Journal of Finance ,
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Jun Qian & Philip E. Strahan, 2005.
"How Law and Institutions Shape Financial Contracts: The Case of Bank Loans ,"
NBER Working Papers
11052, National Bureau of Economic Research, Inc.
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Berger, Allen N. & Udell, Gregory F., 2006.
"A more complete conceptual framework for SME finance ,"
Journal of Banking & Finance ,
Elsevier, vol. 30(11), pages 2945-2966, November.
[Downloadable!] (restricted)
Subal Kumbhakar & Dan Wang, 2007.
"Economic reforms, efficiency and productivity in Chinese banking ,"
Journal of Regulatory Economics ,
Springer, vol. 32(2), pages 105-129, October.
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Sapienza, Paola, 2004.
"The effects of government ownership on bank lending ,"
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M. K. Leung & D. Rigby & T. Young, 2003.
"Entry of foreign banks in the People's Republic of China: a survival analysis ,"
Applied Economics ,
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McConnell, John J. & Servaes, Henri, 1990.
"Additional evidence on equity ownership and corporate value ,"
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"Financial and Legal Constraints to Growth: Does Firm Size Matter? ,"
Journal of Finance ,
American Finance Association, vol. 60(1), pages 137-177, 02.
[Downloadable!] (restricted)
Berger, Allen N. & Clarke, George R. G. & Cull, Robert & Klapper, Leora & Udell, Gregory F., 2005.
"Corporate governance and bank performance : a joint analysis of the static, selection, and dynamic effects of domestic, foreign, and state ownership ,"
Policy Research Working Paper Series
3632, The World Bank.
[Downloadable!]
Other versions:
Berger, Allen N. & Clarke, George R.G. & Cull, Robert & Klapper, Leora & Udell, Gregory F., 2005.
"Corporate governance and bank performance: A joint analysis of the static, selection, and dynamic effects of domestic, foreign, and state ownership ,"
Journal of Banking & Finance ,
Elsevier, vol. 29(8-9), pages 2179-2221, August.
[Downloadable!] (restricted) Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998.
"Law and Finance ,"
Journal of Political Economy ,
University of Chicago Press, vol. 106(6), pages 1113-1155, December.
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Other versions: Anup Agrawal & Charles R. Knoeber, .
"Firm Performance and Mechanisms to Control Agency Problems between Managers and Shareholders (Revision of 29-94) ,"
Rodney L. White Center for Financial Research Working Papers
8-96, Wharton School Rodney L. White Center for Financial Research.
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"Finance and Growth: Schumpeter Might Be Right ,"
The Quarterly Journal of Economics ,
MIT Press, vol. 108(3), pages 717-37, August.
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Other versions:
King, Robert G. & Levine, Ross, 1993.
"Finance and growth : Schumpeter might be right ,"
Policy Research Working Paper Series
1083, The World Bank.
[Downloadable!] King, Robert G. & Levine, Ross, 1993.
"Finance and growth : Schumpeter might be right ,"
Policy Research Working Paper Series
1083, The World Bank.
[Downloadable!] McConnell, John J. & Servaes, Henri, 1995.
"Equity ownership and the two faces of debt ,"
Journal of Financial Economics ,
Elsevier, vol. 39(1), pages 131-157, September.
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Kwan, Simon H., 2003.
"Operating performance of banks among Asian economies: An international and time series comparison ,"
Journal of Banking & Finance ,
Elsevier, vol. 27(3), pages 471-489, March.
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Other versions: Agrawal, Anup & Knoeber, Charles R., 1996.
"Firm Performance and Mechanisms to Control Agency Problems between Managers and Shareholders ,"
Journal of Financial and Quantitative Analysis ,
Cambridge University Press, vol. 31(03), pages 377-397, September.
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Shleifer, Andrei & Vishny, Robert W, 1986.
"Large Shareholders and Corporate Control ,"
Journal of Political Economy ,
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