Emerging markets banks ownership and performance : evidence from China

In the last decade. the Chinese government-owned banks have undergone a privatization 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 or performance indicators with changes in ownership structure? This chapter aucmpts to answer these questions by employing an econometric model that utilizes the performance effects of various types or bank ownership. By using the panel data or China's hanks during the period from 2003-20 I 0. we carry om a series of regressions to analyze the performance effects of various forms of bank ownership including, state-owned banks, city commercial banks. rural commercial banks. other commercial hanks, foreign hanks in China and overseas subsidiaries. Our results indicate that the Big Four stateowned commercial banks arc less profitable than the other forms of ownership considered. In terms of overall performance. our results indicate that both overseas subsidiaries of Chinese's banks and foreign banks operating within China arc highly prolltablc. earning significant returns on assets and in the case of the so-called City banks the results report a high and positive return on equity (ROE). Interestingly the major four state-owned hanks indicale the lowest performance across the various ownership structures examined in terms of returns on assets. percentage ofnon-pcrfonning loans and non-interest expenses (NIE).