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Banking In China: Are New Tigers Supplanting the Mammoths?

Author

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  • Giovanni Ferri

    (University of Bari, Italy, Hong Kong Institute for Monetary Research)

Abstract

"New Tigers" (including city commercial banks) outperform state-owned commercial banks burdened with non-performing loans from unprofitable state-owned enterprises. We study whether this is due solely to superior corporate governance (multiple shareholders versus total government ownership) or also to the favorable environment (the New Tigers target affluent China, while state-owned commercial banks operate nationwide). Using a field survey on 20 city commercial banks from three provinces at different levels of economic development, we find better performance at those in the East and worse performance at those controlled by state-owned enterprises. Geography and policy do matter, and reform of state-owned commercial banks is necessary to bring better banking to China.

Suggested Citation

  • Giovanni Ferri, 2008. "Banking In China: Are New Tigers Supplanting the Mammoths?," Working Papers 052008, Hong Kong Institute for Monetary Research.
  • Handle: RePEc:hkm:wpaper:052008
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    References listed on IDEAS

    as
    1. Sonja Opper, 2001. "Dual-track Ownership Reforms: Lessons from Structural Change in China, 1978-1997," Post-Communist Economies, Taylor & Francis Journals, vol. 13(2), pages 205-227.
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    3. Rafael La Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 2002. "Government Ownership of Banks," Journal of Finance, American Finance Association, vol. 57(1), pages 265-301, February.
    4. Park, Albert & Sehrt, Kaja, 2001. "Tests of Financial Intermediation and Banking Reform in China," Journal of Comparative Economics, Elsevier, vol. 29(4), pages 608-644, December.
    5. repec:hrv:faseco:30747188 is not listed on IDEAS
    6. Brandt, Loren & Li, Hongbin, 2003. "Bank discrimination in transition economies: ideology, information, or incentives?," Journal of Comparative Economics, Elsevier, vol. 31(3), pages 387-413, September.
    7. Huang, Yiping, 2002. "Is meltdown of the Chinese banks inevitable?," China Economic Review, Elsevier, vol. 13(4), pages 382-387, December.
    8. Cull, Robert & Xu, Lixin Colin, 2003. "Who gets credit? The behavior of bureaucrats and state banks in allocating credit to Chinese state-owned enterprises," Journal of Development Economics, Elsevier, vol. 71(2), pages 533-559, August.
    9. Stijn Claessens, 1998. "Banking reform in transition countries," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 2(2), pages 115-133.
    10. Cull, Robert & Xu, Lixin Colin, 2000. "Bureaucrats, State Banks, and the Efficiency of Credit Allocation: The Experience of Chinese State-Owned Enterprises," Journal of Comparative Economics, Elsevier, vol. 28(1), pages 1-31, March.
    11. Ramon Moreno, 2002. "Reforming China's banking system," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue may31.
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    Cited by:

    1. Cousin, Violaine, 2011. "中监为体、西监为用 or the specifics of Chinese bank regulation," MPRA Paper 36040, University Library of Munich, Germany.

    More about this item

    Keywords

    China; State Ownership of Banks; Corporate Governance; Geography and Performance;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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