Evaluating the effectiveness of China's financial reform—The efficiency of China's domestic banks

Hsiao, Chêng; Shen, Yan; Bian, Wenlong

doi:10.1016/j.chieco.2015.05.006

Cited by 33 publications

(14 citation statements)

References 35 publications

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“…We observed that the Chinese banks are operating at a very high level of cost efficiency with an average CE value of 0.982. This result agreed with the findings of Hsiao et al [22], which indicated that the cost efficiency of Chinese banks had been converging and getting closer to one by the end of 2012. As our sample period was from 2013 to 2018, it is no wonder that the high CEs of Chinese banks were noticed.…”

Section: The Lerner Index (Li) and Scale Economies (Sc)supporting

confidence: 92%

“…For instance, Lin et al [20] found that the competition from foreign banks promote efficiency of domestic banks, while Fungáčová et al [21] concluded that the increase of competition has no significant relationship with the efficiency of Chinese banks. Other studies mainly focused on the influence of financial reforms [22], risk preference [23,24] and bank ownership types [25,26] on efficiency of Chinese banks. Evidence showed that financial reforms and risk taking were both key determinants that affected efficiency of Chinese banks.…”

Section: Introductionmentioning

confidence: 99%

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A Simultaneous Stochastic Frontier Model with Dependent Error Components and Dependent Composite Errors: An Application to Chinese Banking Industry

Liu

Rahman

et al. 2020

Mathematics

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The paper develops a simultaneous equations stochastic frontier model (SFM) with dependent random noise and inefficiency components of individual equations as well as allowing dependence across all equations of the model using copula functions. First, feasibility of our developed model was verified via two simulation studies. Then the model was applied to assess cost efficiency and market power of the banking industry of China using a panel data of 37 banks covering the period 2013–2018. Results confirmed that our simultaneous SFM with dependent random noise and inefficiency components outperformed its predecessor, which is a simultaneous SFM with dependent composite errors but with independent random noise and inefficiency components of individual SFMs as well as the conventional single-equation SFM. Apart from the statistical and computational superiority of our developed model, we also see that Chinese banks in general have a high level of cost efficiency and that competition in the banking industry of China mainly exists in state-owned banks and joint stock banks. Presence of economies of scales as well as diseconomies of scales were found in different banks. Also, the state-owned banks embraced most sophisticated technologies thereby allowing them to operate with the highest level of cost efficiency.

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Section: The Lerner Index (Li) and Scale Economies (Sc)supporting

confidence: 92%

Section: Introductionmentioning

confidence: 99%

A Simultaneous Stochastic Frontier Model with Dependent Error Components and Dependent Composite Errors: An Application to Chinese Banking Industry

Liu

Rahman

et al. 2020

Mathematics

View full text Add to dashboard Cite

show abstract

“…Therefore, the variables that are not explained by this model are often considered as exceptions to the majority of stocks. Traditionally, financial economists believe that micro-investors are not entirely rational and often act as noisy traders, while they view institutions as well-known and complex investors [6][7][8].…”

Section: Introductionmentioning

confidence: 99%

The Effect of Real Investors on the Inefficiency of Stock Returns of Tehran Stock Exchange

Ansari¹,

Jafari²

2020

EBM

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Fluctuations in stock returns and the factors that affect them are controversial in financial research. Institutional investors, as a group of investors, play an important role in the economic development of the capital market through their access to huge financial resources. But real investors may not be able to achieve the return and profitability due to the scarcity of their financial resources. Accordingly, the study of the role of real investors in the volatility of stock returns is very important. The present study aims to find evidence for the relationship between real investors in open volatility of ten stocks. Few studies of financial market irregularities and the behavior of capital market investors have focused on the results. By challenging the efficient market hypothesis, it is clear that real investors raise the stock price of companies that have been successful over time. The real price and the price of unsuccessful stocks are lower than the real price, but over time the market realizes its mistake and the prices return to equilibrium. Acceptance of stock returns is irregular (Tehran Stock Exchange). In order to achieve the research goal, ten-year information (2009-2019) of 140 companies by judicial sampling method was studied. This research is applied in terms of purpose and testing the hypotheses of logit and cross-sectional regression. Fama and French three-factor model and Carhart's four-factor model were used. The results indicate that the relationship between stock price jump and real investors has been explained and finally practical suggestions have been provided.

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“…Financial ratios provide useful information for evaluating bank performance and efficiency. The basic financial ratios related to efficiency are return on equity (ROE) and return on assets (ROA) (Chao, Yu, & Wu, 2015;Svitalkova, 2014;Titko & Jureviciene, 2014;Lee & Kim, 2013). Although in most cases the variables encompass assets quality, capital strength, earnings, and liquidity, the number of variables included in research may differ significantly in the literature (Fethi & Pasiouras, 2010).…”

Section: Introductionmentioning

confidence: 99%

Applying a two-stage TOPSIS approach and stepwise regression in evaluating bank performance: evidence from Turkish banks

Sarı

Kayral

2019

Banks and Bank Systems

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As a crucial component of the financial sector, banks play an intermediary role in creating and providing financial services to customers. Therefore, the evaluation of banking sector activity is important for stakeholders and managers. This paper investigates the key criteria in analyzing bank performance and efficiency and the relative performance of Turkish banks in terms of the pre-determined criteria during 2008–2018. This study aims to introduce a robust and easy-to-calculate mathematical model for estimating bank performance using stepwise regression and TOPSIS methods. The TOPSIS ranking of banks from the best to the worst allows establishing that the bank with the highest mean score is Akbank (AB), while Ziraat Bank (ZB) and Garanti Bank (GB) follow AB over the period. The results of the stepwise regression analysis show that managing non-performing loans and expenses (both personnel and interest expenses) are critical to high performance in the banking sector.

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Evaluating the effectiveness of China's financial reform—The efficiency of China's domestic banks

Cited by 33 publications

References 35 publications

A Simultaneous Stochastic Frontier Model with Dependent Error Components and Dependent Composite Errors: An Application to Chinese Banking Industry

A Simultaneous Stochastic Frontier Model with Dependent Error Components and Dependent Composite Errors: An Application to Chinese Banking Industry

The Effect of Real Investors on the Inefficiency of Stock Returns of Tehran Stock Exchange

Applying a two-stage TOPSIS approach and stepwise regression in evaluating bank performance: evidence from Turkish banks

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