Ownership Structure and Risk-Taking: Comparative Evidence from Private and State-Controlled Banks in China

Dong, Yizhe; Meng, Chao; Firth, Michael; Hou, Wenxuan

doi:10.2139/ssrn.2089979

Cited by 17 publications

(30 citation statements)

References 110 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In contrast, foreign banks take the best technology, whose cost frontier is the nearest to the metafrontier. SOCBs are obliged to finance government projects or state-owned enterprises (SOEs), which contribute high social returns at the expense of little profits due to their divergence from the market mechanism and imposition by certain government intervention (Clarke, Cull, and Shirley 2005;Dong et al 2014a). In addition, soft budget constraints that cause excessive risk-taking and the misallocation of resources result in inferior technology (Sheshinski and Lopez-Calva 2003).…”

Section: B Measures Of Cost Efficiency and Technology Gapsmentioning

confidence: 99%

“…Since 1979, China's financial authorities have adopted a sequence of major reforms to address the institutional, political, and organizational problems faced by the banking industry and to meet international banking standards. The reforms also attempt to deal with encroaching risk and competition (Dong et al 2014a;Dong, Hamilton, and Tippett 2014b;Hou, Wang, and Li 2015;Jiang, Yao, and Feng 2013;Tang and Floros 2013). These structural reforms have pushed the banking sector toward commercialization, modernization, privatization, Feng 2013).…”

Section: Introductionmentioning

confidence: 99%

“…1 Banks with different ownership structures may be confronted by various economic, financial, political, or geographical operation constraints (Huang and Fu 2013). For example, although SOCBs have been partially privatized, the ultimate voting control remains with the state, which exerts substantial influence over their lending practices (Dong et al 2014a). The city commercial banks in China are the main providers of banking services within a particular administrative region.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

What Causes the Efficiency and the Technology Gap Under Different Ownership Structures in the Chinese Banking Industry?

Lee

Huang

2018

Contemporary Economic Policy

View full text Add to dashboard Cite

This paper estimates and compares the cost efficiency of the Chinese banking industry among different ownership types for the period 2003–2014, using the stochastic metafrontier model. We find that foreign banks have the lowest cost frontier, while state‐owned commercial banks undertake the least sophisticated technology. Moreover, the results of the upward trend in the technology gap ratio (TGR) and in metafrontier cost efficiency support that a more open financial market is able to enhance banking efficiency. As for the role of environmental conditions, off‐balance sheet items, non‐performing loans, and financial market structure significantly impact the TGRs of different bank types. (JEL C51, G21, D24)

show abstract

Section: B Measures Of Cost Efficiency and Technology Gapsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

What Causes the Efficiency and the Technology Gap Under Different Ownership Structures in the Chinese Banking Industry?

Lee

Huang

2018

Contemporary Economic Policy

View full text Add to dashboard Cite

show abstract

“…Firth et al (2014) find that after the introduction of a foreign investor, domestic banks tend to decrease their non-traditional business. Gao and Ge (2008) report that the majority of foreign banks in China are from developed nations, and that they exert a positive influence on the regulatory environment and consequently improve the efficiency of the banking sector.…”

Section: Previous Researchmentioning

confidence: 92%

The impact of foreign bank penetration on the domestic banking sector: new evidence from China

Luo

Dong

Armitage

et al. 2015

The European Journal of Finance

Self Cite

View full text Add to dashboard Cite

This study proposes a foreign bank branch networks index (FBBNI) to capture bank-level exposure to competition from foreign banks in terms of geographical proximity. The index takes account of the rapidly expanding branch networks of both foreign and domestic banks in China.Based on data from a sample of three types of Chinese commercial banks from 2002 to 2011, we find that exposure to the branch networks of foreign banks is associated with improved profitability at domestic banks, higher efficiency, and increased non-interest income, consistent with knowledge transfer from foreign banks. These relationships are most pronounced for jointstock domestic banks (JCBs) presumably because their ownership structure fosters knowledge transfer.

show abstract

“…Similarly Dong et al (2014) show that Chinese banks owned by the government tend to exhibit more risk taking strategies than those owned by private investors. Whereas for the Russian banks (Fungáčová and Solanko, 2009) and banks of the Central Eastern Europe (Distinguin et al, 2013), their findings show the opposite effect.…”

Section: Introductionmentioning

confidence: 91%

Micro-level Evidences of Moral Hazard in the European Financial Institutions

Janda

Kravtsov

2017

The Impact of Globalization on International Finance and Accounting

View full text Add to dashboard Cite

Abstract:This article examines the evidences of moral hazard in the risk taking behavior of the 500 banks in Central Europe, the Baltics and Balkan region. We test the evidences of moral hazard in empirical relationships between shareholders, bank managers and regulatory restraints. The results generally support the theoretical arguments, though we cannot find explicit evidences of moral hazard in risk taking behavior of the bank managers of the region. Our findings suggest that the capital requirements and regulatory concerns along with performance efficiency exhibit the strongest impact on the level of risk taking.

show abstract

Ownership Structure and Risk-Taking: Comparative Evidence from Private and State-Controlled Banks in China

Cited by 17 publications

References 110 publications

What Causes the Efficiency and the Technology Gap Under Different Ownership Structures in the Chinese Banking Industry?

What Causes the Efficiency and the Technology Gap Under Different Ownership Structures in the Chinese Banking Industry?

The impact of foreign bank penetration on the domestic banking sector: new evidence from China

Micro-level Evidences of Moral Hazard in the European Financial Institutions

Contact Info

Product

Resources

About