The Effects of Public Listing on the Performance of Banks in China
AbstractChinese banks have been pushing further commercialization, corporate restructuring and public listing in recent years. The ten largest commercial banks in China have all been listed, among which nine went public in the past decade. This paper conducts an empirical investigation on how public listing affects the performance of Chinese banks. Particularly, we examine the pre-listing restructuring effect and the different effects of public listing locations such as Shanghai and Hong Kong, which have not received much attention in the literature. Our sample covers all the 16 listed banks in China and 17 other unlisted banks over the period of 1997-2008. Using a pooled cross-section regression, we compare three modified models built upon Berger et al. (2005) to consider the following three effects: 1) the static governance effect; 2) the selection effect and 3) the dynamic effect. We found that the public listing effect should be modeled as a dynamic process rather than a sudden structural change at a cut-off point, thus it is important to compare the banks' performance during the pre-listing restructuring period with the after-listing period. Moreover, the public listing in Hong Kong is found to have more positive and persistent effects on banks' performance in terms of both profitability and financial safety than the public listing in Mainland China. We also provide some tentative explanations for such different effects on banks' performance, and discuss the implications to both policy makers and market participants.
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Bibliographic InfoPaper provided by Hong Kong Institute for Monetary Research in its series Working Papers with number 072011.
Length: 36 pages
Date of creation: Feb 2011
Date of revision:
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Public Listing; Cross Listing; Bank Performance; Chinese Banks;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-19 (All new papers)
- NEP-BAN-2011-03-19 (Banking)
- NEP-EFF-2011-03-19 (Efficiency & Productivity)
- NEP-TRA-2011-03-19 (Transition Economics)
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.:
- Chen Chien-Hsun & Shih Hui-Tzu, 2004.
"Initial Public Offering and Corporate Governance in China's Transitional Economy,"
in: Governance, Regulation, and Privatization in the Asia-Pacific Region, NBER East Asia Seminar on Economics, Volume 12, pages 185-210
National Bureau of Economic Research, Inc.
- Chen-Chien Hsun & Shih Hui-Tzu, 2003. "Initial Public Offering and Corporate Governance in China's Transitional Economy," NBER Working Papers 9574, National Bureau of Economic Research, Inc.
- 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.
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- Hsiu-Ling Wu & Chien-Hsun Chen & Hui-Ling Lin, 2009. "Can a stock market listing help to improve the operational performance of China's banks?," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 12(1), pages 13-28.
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