How does Bank Capital Affect Bank Profitability and Risk? Evidence from China's WTO Accession

Ning, Shao-Lin; Lee, Chi‐Chuan

doi:10.1111/cwe.12119

Cited by 25 publications

(15 citation statements)

References 41 publications

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“…() for European commercial banks and Lee et al . () for Chinese banks support the moral hazard hypothesis, which suggests that bank capital is inversely related to bank risk. Kontbay‐Busun and Kasman (), and Shim () are other empirical studies that show that bank capital is inversely related to bank risk.…”

Section: Review Of Related Empirical Studiesmentioning

confidence: 56%

“…The existing empirical studies (see, for example, Baselga‐Pascual et al ., ; Lee et al ., ; Shim, , among others), dealing with a similar question, focus on the relationship between total equity capital and risk‐taking behaviour of banks. The existing studies do not distinguish common equity capital from other components (hybrid Tier 1 capital and Tier 2 capital) of total equity; the authors interpret their results based on a sign of the total equity ratio.…”

Section: Introductionmentioning

confidence: 99%

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Do Basel III Higher Common Equity Capital Requirements Matter for Bank Risk‐taking Behaviour? Lessons from South Africa

Adesina¹,

Mwamba²

2016

African Development Review

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This paper examines the role of common equity capital in determining the risk-taking behaviour of banks in South Africa. Using system GMM, the results show that higher common equity capital is associated with lower bank risk. Additionally, the results show that there is a negative and significant relationship between business cycles and bank risk, while the relationship between bank market power and risk is positive and significant. The findings remain robust after using alternative measures of bank risk. On the whole, this study recommends that an increase in common equity capital should be coupled with control of bank market power to achieve the goal of curtailing excessive risk appetite of banks.

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Section: Review Of Related Empirical Studiesmentioning

confidence: 56%

Section: Introductionmentioning

confidence: 99%

Do Basel III Higher Common Equity Capital Requirements Matter for Bank Risk‐taking Behaviour? Lessons from South Africa

Adesina¹,

Mwamba²

2016

African Development Review

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“…The size effect of Chinese banks on bank profi tability during the fi nancial crisis has not been clearly established (Heffernan and Fu, 2008;Lee et al, 2015). Following the global fi nancial crisis China injected RMB4tn (US$586bn) into its economy (primarily through banks) to stimulate domestic expansion (Li and Wong, 2008).…”

Section: Hypothesis Development and Literature Reviewmentioning

confidence: 99%

Comparison of Bank Profitability in China and the USA

Ding

Fung

Jia

2017

China and World Economy

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This paper examines and compares the profitability of banks in the USA and China.The USA has the largest market-based banking system and the financial system of China is still bank-based. Our analysis indicates that in terms of profitability, banks in China outperformed those in the USA during our study period (2008)(2009)(2010)(2011)(2012)(2013)(2014). Real estate loans had an adverse effect on US bank profi tability during the fi nancial crisis and no effect after the crisis but consistently improved the profi tability of Chinese banks.Interest margins have no effect on US bank profitability but a consistently positive effect on Chinese banks, confi rming that China is a traditional bank-based economy. Interbank loans have a positive and significant effect on Chinese bank profitability, while interbank domestic loans have a negative effect on US bank profi tability. Finally, size had a positive effect on US banks after the fi nancial crisis period, confi rming the scale economies of large US banks, but a negative effect on Chinese banks, indicating diseconomies of scale.

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“…Besides; Lee [9] employed a panel regression analysis for Korean banks during ( 2000…2008). This study finds that higher capital ratios banks tend to manage the better factors of determining bank profitability.…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of Capital on Bank Profitability: Case of Tunisia

Moussa

Trabelsi

Boubaker

2021

JEMT

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The capital adequacy ratio measures the ability of a financial institutions to meet its liabilities by comparing its capital with assets. This article studied the relationship between bank capital and bank profitability measured by (Return on assets; return on equity; net interest margin). We used a method of static panel for a sample of 11 banks in Tunisia between (2000…2018). We found that bank capital has a significant impact on ROA. But capital has a non significant effect on bank return on equity and not significant impact on bank net interest margin.

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How does Bank Capital Affect Bank Profitability and Risk? Evidence from China's WTO Accession

Cited by 25 publications

References 41 publications

Do Basel III Higher Common Equity Capital Requirements Matter for Bank Risk‐taking Behaviour? Lessons from South Africa

Do Basel III Higher Common Equity Capital Requirements Matter for Bank Risk‐taking Behaviour? Lessons from South Africa

Comparison of Bank Profitability in China and the USA

The Impact of Capital on Bank Profitability: Case of Tunisia

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