China's banks ownership and performance 2003 - 2010

Kevin Daly, Xiaoxi Zhang

    Research output: Chapter in Book / Conference PaperConference Paperpeer-review

    Abstract

    ![CDATA[This paper constructs a model of Chinese banking operating within China. In the last decade the Chinese government owned banks have undergone a privatisation program resulting in considerable changes in ownership of Chinese banks. These changes invite important questions to be answered. In particular how have banks changed in terms of performance indicators with changes in ownership structure? This paper employs a static analysis in our econometric modelling of the performance effects of various types of bank ownership. Our dataset on Chinese banks covers the period 2003 - 20 I 0, a sufficient timeframe for the various types of ownership structures to consolidate and to have matured in their operating environment. In our regression analyses we estimate the effects on four banks' performance indicators (ROA, ROE, NIE and NPL) of a change in ownership structure across three variables which proxy for bank size, stability and profits. By using the panel data of China's banks during the period from 2003-20 I 0, we carry out a series of regressions to analyse the performance effects of various forms of bank ownership including state-owned banks, city commercial banks, rural commercial banks, other commercial banks, foreign banks in China and overseas subsidiaries. The results show that for the Big Four state owned banks have poorer long term performance in terms of returns on assets, return on equity and net interest margins compared to City Commercial Bank, Foreign Banks and Overseas (subsidiaries of Chinese banks). Most existing empirical arguments support these arguments. The results also suggest that banks involved in foreign acquisitions outperformed banks not involved in foreign acquisitions. The return on assets (ROA), return on equity (ROE), non-interest expense/average Assets (NIE) and impaired loans/gross loans (NPL) are all statistically significantly better for banks selected for foreign acquisition than those that are not.]]
    Original languageEnglish
    Title of host publicationIII World Finance Conference, Rio de Janeiro, July 2-4, 2012
    PublisherWorld Finance Conference
    Number of pages12
    Publication statusPublished - 2012
    EventWorld Finance Conference -
    Duration: 2 Jul 2012 → …

    Conference

    ConferenceWorld Finance Conference
    Period2/07/12 → …

    Keywords

    • banks and banking, Chinese
    • performance

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