Bank competition in China: a blessing or a curse for financial system?

Abstract

Owing to a lack of consensus on whether the competition among the banks brings stability, or vulnerability in the financial system, this research is aimed towards investigating the Chinese banking industry. For this purpose, we have used the Granger and subsample time varying rolling window, in order to estimate the dynamic causality of the competition in the banking sector, and the systematic risk factors that follow, in China. The purpose of exploring the two-way causality is to make the banking system more stable, and also to provide new and first-hand evidence that can aid in reducing the occurrence of systematic risks. The results show that the competition in the banking sector has a negative impact on the systematic risk. This means that the increased competition in the banking sector will eventually lead to a reduction in the systematic risk. The results of the study are supported by the competition-stability hypothesis. Also, following the results, the policy direction we propose is that the banks may aim at reducing their systematic risks. They may achieve this by increasing their market share and accelerating transformation, in order to improve their competitiveness, which will help the banking system in China to achieve a sustainable form of stability. Moreover, our findings will also be helpful for the Chinese Ministry of Commerce (MOFCOM), which has been, over the years, in the process of developing an assessment framework for bank mergers, while also trying to minimize the tradeoff between competition and financial stability.

Does the Economic Growth Improve Public Health? A Cross-Regional Heterogeneous Study in China

“…Life quality gets guaranteed, people pay more attention to health issues, and health-related expenditures are increased (8)(9)(10). The improvement of public health will promote the improvement of people's work efficiency and the extension of working hours, which will promote economic growth and form a virtuous circle (11)(12)(13).…”

Does the Development of the Insurance Industry Promote the Purchase of Rural Commercial Health Insurance?

“…Therefore, it is important to promote development of the insurance industry via the above mentioned measures so as to provide more convenient and efficient services to rural residents and bring more protection to farmers (44,45). In this way, it is easier for rural residents to better accept insurance products and promote purchase of commercial health insurance (46,47).…”

COVID-19 and international trade: insights and policy challenges in China and USA

“…In the last few decades, trade has become a major contributor to the economic development of many advanced economies, and the US and China are no exceptions to this growth trend (Su et al, 2020Sun et al, 2021). According to the World Bank, in the year 2019, the contribution of exports in the total GDP of China was almost 36%, and for the US, this number was at 26%.…”