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Globalizations and bank performance in China

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  • Sufian, Fadzlan
  • Habibullah, Muzafar Shah

Abstract

The paper provides for the first time empirical evidence on the impact of economic globalization on the performance of banks operating in the Chinese banking sector. The empirical findings from this study suggest that the well capitalized banks tend to be more profitable, while expense preference behavior exerts negative impact on bank profitability in China. By examining different components of economic globalization, we find that greater economic integration via higher trade flows, cultural proximity, and greater political globalization have significant and positive influence on bank profitability levels. The impacts of personal contacts and information flows seem to work in favour of the Chinese banks. During the period under study, the empirical findings seem to suggest that liberalization (restrictions) of the capital account exerts positive (negative) influence on the profitability of banks operating in the Chinese banking sector.

Suggested Citation

  • Sufian, Fadzlan & Habibullah, Muzafar Shah, 2012. "Globalizations and bank performance in China," Research in International Business and Finance, Elsevier, vol. 26(2), pages 221-239.
  • Handle: RePEc:eee:riibaf:v:26:y:2012:i:2:p:221-239
    DOI: 10.1016/j.ribaf.2011.12.005
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    Cited by:

    1. Djalilov, Khurshid & Piesse, Jenifer, 2016. "Determinants of bank profitability in transition countries: What matters most?," Research in International Business and Finance, Elsevier, vol. 38(C), pages 69-82.
    2. Rao-Nicholson, Rekha & Salaber, Julie & Cao, Tuan Hiep, 2016. "Long-term performance of mergers and acquisitions in ASEAN countries," Research in International Business and Finance, Elsevier, vol. 36(C), pages 373-387.

    More about this item

    Keywords

    Banks; Economic globalization; Profitability; Panel regression analysis; China;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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