Bad Loans Versus Sluggish Rural Industrial Growth: A Policy Dilemma of China's Banking Reform

Kwong, Charles; Lee, Pak K.

doi:10.1080/1354786042000309053

Cited by 9 publications

(4 citation statements)

References 8 publications

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“…This relationship orientation of Chinese banks can be useful when governments encourage lending to competent firms (Heide and John, 1992; Kwong and Lee, 2005). However, this relationship orientation can be counterproductive for the economy as a whole, as young firms may be particularly innovative but under-funded; the lack of funds in turn can reduce banks’ profitability and miss opportunities to upgrade Chinese products and services (Podpiera, 2006; Sufian, 2009).…”

Section: Business–bank Relationships In Chinamentioning

confidence: 99%

Extending credit to small and medium size companies

Wong

Lü

Tjosvold

et al. 2016

IJCMA

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Purpose Funding small- and medium-sized enterprises (SMEs) may be especially valuable in China to stimulate innovation and its emerging market economy. These firms have been advised to build on the Chinese value of guanxi to manage conflicts and develop relationships with banks. This study aims to explore the nature of relationships that help SMEs inform banks and convince them to provide credit. Design/methodology/approach As this study’s theorizing is about whether banks and firms that manage their conflicts for mutual benefit set the foundation for bank’s confidence in extending credit, therefore, both the bank officers and the company managers were asked to provide information for the study. In total, 106 pairs of bank officers in the loan department of four banks and SME managers in Shanghai, China, completed a questionnaire survey for this study. Findings Results support the argument that marketing research on customer orientation and organization behavior research on conflict management identify how to develop effective marketing relationships between SMEs and banks in China. Banks that were customer-oriented laid the groundwork for managing conflict cooperatively and not competitively with borrowing firms. Cooperative conflict management in turn was found to convince banks that they could confidently provide credit and to convince borrowers that their transaction costs will be reasonable. Originality/value This study identifies that developing guanxi and the capacity to manage conflict cooperatively are an important foundation for providing credit to SMEs in China.

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Section: Business–bank Relationships In Chinamentioning

confidence: 99%

Extending credit to small and medium size companies

Wong

Lü

Tjosvold

et al. 2016

IJCMA

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“…Unmonitored policy lending behaviours by Chinese banks to SOEs have resulted in trillions of RMB NPLs and substantial systematic risks within its banking industry (e.g. Bonin and Huang, 2001; Huang, 2002; Nanto and Sinha, 2002; Gamble, 2003; Gordon, 2003; Kwong and Lee, 2005; Xiao, 2006). However, it is difficult for the SOCBs to stop policy lending for the sake of social stability and other various government policies (e.g.…”

Section: Literature and Hypothesismentioning

confidence: 99%

“…Bonin and Huang, 2001; Huang, 2002; Nanto and Sinha, 2002; Gamble, 2003). Gordon (2003), Kwong and Lee (2005) and Xiao (2006) investigate the NPLs and systematic risks. Ferri (2009), García‐Herrero et al (2009) and Matthews and Zhang (2010) examine the NPLs and profitability and efficiency of the state‐owned commercial banks (SOCBs) and the joint stock commercial banks (JSCBs).…”

Section: Introductionmentioning

confidence: 99%

Bad debt provisions of financial institutions

Shan

2012

International Journal of Managerial Finance

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Access to this document was granted through an Emerald subscription provided by 353605 [] For AuthorsIf you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this paper is to investigate whether the level of bad debt provisions of financial institutions is affected by internal governance mechanisms (IGMs) from the perspective of the Type II principal-principal (PP) conflicts between the controlling shareholders and the minority shareholders. Design/methodology/approach -The authors' sample covers all listed financial institutions in China, comprising a panel data set of 139 firm-year observations covering 1999 to 2009. Within China's two-tier corporate governance context, the three IGMs -ownership structure, board of directors and supervisory board -are measured to examine the level of bad debt provisions. Findings -The findings suggest that state ownership and legal person ownership are negatively related to the level of bad debt provisions, but board size reveals a positive association. Other factors including foreign ownership, independent directors, board meeting, supervisory board size and supervisory board meeting were found to have no impact. Practical implications -The spirit of corporate governance reform has not been transferred to financial institutions sufficiently. The board of directors and supervisory board actually act the roles of "window dressing" or "rubber stamp" within the current two-tier system. From the Type II PP perspective, the controlling shareholders are found to moderate the conflicts between other parties but they still expropriate the interests of minority shareholders and are the real beneficiaries of recent reforms. Thus, further financial reforms seem necessary in China. Originality/value -The paper provides an empirical analysis of factors that underlie IGMs during an important period of regulatory change and organizational reform, and fills a literature gap concerning the effectiveness and efficiency of financial institutions.

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“…The Chinese experience in recent decades shows the vast potential capacities existent in rural areas for expanding non-agricultural production. For instance, the output of China's rural industry sector increased in 1978-2000 at the astonishing rate of 22 percent per year in average (Kwong andLee, 2005, Bramall, 2000).…”

Section: Poverty Reduction Strategiesmentioning

confidence: 99%

Towards a new consensus: poverty reduction strategies for Bolivia

Buzaglo

Calzadilla

2009

Int J of Dev Issues

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Purpose -The purpose of this paper is to evaluate the viability for Bolivia of attaining the United Nations millennium development goal established in year 2000, of halving extreme poverty by 2015. Design/methodology/approach -The study is based in numerical simulation with a model of the Bolivian economy. The model pertains to the (widely defined) family of dynamic input-output models, and represents in detail income distribution, by size and socioeconomic class. Findings -The millennium development goal of halving extreme poverty by 2015 seems to be a difficult, but attainable goal for Bolivia. Given the expected debt reduction agreed with international creditors, the goal can be attained by a combination of investment and redistribution policies. Research limitations/implications -It is implied that a new approach to development strategy is adopted. A new policy consensus is assumed to supplant the Washington Consensus. The new consensus model is based on objectives such as policy autonomy, structural change, and distributive justice. Poverty reduction strategy is a combination of policies associated with these objectives, viz. foreign debt policy, investment policy, and income distribution policy. Practical implications -The study shows that capital account regulation, investment planning and redistributive policies might conform effective strategies for attaining the millennium development goals. Originality/value -The study represents a different approach to poverty reduction strategy, which explores the economy-wide effects of new policy instruments, particularly on growth capacity, output structure, and income distribution.

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Bad Loans Versus Sluggish Rural Industrial Growth: A Policy Dilemma of China's Banking Reform

Cited by 9 publications

References 8 publications

Extending credit to small and medium size companies

Extending credit to small and medium size companies

Bad debt provisions of financial institutions

Towards a new consensus: poverty reduction strategies for Bolivia

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