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Efficiency Spillovers of Foreign Direct Investment in the Chinese Banking System

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Listed:
  • Ziliang Deng
  • Honglin Guo
  • Guilan Kong

Abstract

This research suggests that the efficiency spillovers of foreign banks in China have played an integral role in transforming the fragile banking system into a relatively robust one. Stochastic frontier analysis is employed to analyze the efficiency of the Chinese banks during 2001-2007 with the data of 126 banks. The study suggests that the presence of foreign banks has helped improve the overall profitability of the Chinese banks and has also effectively constrained the scale of loans. The findings manifest the importance of efficiency spillovers which can be brought to an economy in transition by cautious financial liberalization.

Suggested Citation

  • Ziliang Deng & Honglin Guo & Guilan Kong, 2011. "Efficiency Spillovers of Foreign Direct Investment in the Chinese Banking System," Global Economic Review, Taylor & Francis Journals, vol. 40(2), pages 179-191.
  • Handle: RePEc:taf:glecrv:v:40:y:2011:i:2:p:179-191
    DOI: 10.1080/1226508X.2011.585053
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    References listed on IDEAS

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    1. repec:taf:applec:v:49:y:2017:i:40:p:3995-4012 is not listed on IDEAS
    2. Ziliang Deng & Rod Falvey & Adam Blake, 2013. "Quantifying Foreign Direct Investment Productivity Spillovers in China: A Computable General Equilibrium Model," Asian Economic Journal, East Asian Economic Association, vol. 27(4), pages 369-389, December.

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