Bank Performance In China Research Articles

Decision-Making Framework for Improving Bank Performance in Emerging Markets: The Analysis of AHP-TOPSIS and AHP-GRA Models

Abstract This study utilizes the Analytic Hierarchy Process (AHP) in combination with the Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) and Grey Relational Analysis (GRA) models to thoroughly assess the performance of banks in China, India, Pakistan, and Thailand. The integrated results offer significant insights into the relative rankings of various banks in each country. In China, Bank of China Ltd (BOC) emerges as the top performer, setting a benchmark for others. Similarly, in India, the State Bank of India is consistently identified as the leading bank. The National Bank of Pakistan stands out as the top performer in Pakistan. In Thailand, despite minor deviations in results, Kasikornbank PCL (KBANK) consistently shows strong performance. The alignment of results between AHP-TOPSIS and AHP-GRA underscores the reliability of both models, providing stakeholders and decision-makers with a comprehensive understanding of bank performance. This enables them to identify benchmarks, leverage strengths, and address areas for improvement within each country’s banking sector.

Strategic Literature Review on contingency factors and bank performance in china

Strategic Literature Review on contingency factors and bank performance in china

Knowledge Management, Growth Mindset, Fintech Adoption and Commercial Bank Performance in China

Knowledge Management, Growth Mindset, Fintech Adoption and Commercial Bank Performance in China

Mini-Review on the Relationship between Cash Compensation of Senior Executives and Bank Performance in China

Employee compensation is the reward that reflects its value in providing services to the enterprise, including monetary compensation and non-monetary compensation. Monetary compensation refers to the economic income measured in currency obtained by employees by completing the work in their own positions, while non-monetary benefits are those that cannot be measured in currency, such as the distribution of self-produced products and provision of benefits such as health care services. Therefore, remuneration is a measure and manifestation of the value that employees bring to the company for their services. In this paper, reviews on the relationship between cash compensation of senior executives and bank performance are conducted from the aspects of definition of compensation requirement and bank performance, worldwide theoretical reviews, and empirical reviews. Based on the analysis of relationship between compensation and bank performance as well as managerial discretion and pay-performance sensitivity in different literatures, the laggings in China’s studies are discussed in the end.

Effect of CEO power and board strength on bank performance in China

Given that a powerful CEO is more likely to overcome problems and control performance in a firm, this study first focuses on exploring whether CEO power positively affects certain measures of bank performance and which sources of CEO power have these positive impacts. Next, this study further analyzes whether the positive impact of CEO power on performance is negatively mediated by board strength. Our sample includes data on the three main types of Chinese banks for 2006 to –2016.Our results show that CEO structural power significantly improves a bank’s overall profitability, risk-taking ability and lending quality, CEO ownership power significantly raises a bank’s lending quality, and CEO expert power significantly increases a bank’s overall and shareholder profitability. As considering the endogeneity, CEO prestige power significantly improves a bank’s overall profitability. Next, we use the proportion of independent directors as our measure of board strength and find that a stronger board reduces the beneficial effects of CEO structural power on a bank’s lending quality, of CEO ownership power on shareholder profitability, and of CEO expert power on lending quality. There are similar harmful mediating effects when we use the proportion of foreign investors and board size as measures of board strength. Our results can help Chinese bank authorities develop policies to appropriately raise bank CEOs’ power and reduce board supervision of CEO power.

Bank performance in China: A Perspective from Bank efficiency, risk-taking and market competition

The current paper contributes to the empirical literature on bank profitability by testing the joint-impact of different types of risk, competition in different banking markets and different types of efficiency on bank profitability using a sample of Chinese commercial banks over the period 2003–2017. In particular, we fill in the gap of the empirical studies by examining the impact of efficiency on profitability when banks undertake different levels of risk-taking behaviour and face different degrees of competition. The results show that competition in the Chinese banking markets (deposit market, loan market and non-interest income market) is stronger over the period 2003–2005 and also 2014–2017. In addition, it is found that bank size, cost efficiency, profit efficiency and inflation are significantly related to bank profitability. Finally, we find that the positive impact of cost efficiency on profitability is stronger when banks undertake higher levels of risk and face more competition.

Study on the Impact of Fair Value Measurement on Commercial Bank's Stock Price

The commercial banks of listed companies in the financial sector are larger, their operating performance not only represent the level of managers, more representative of the overall economic situation in China and strong representative. Implemented in 2014, the 39th of accounting standards for business enterprises, since the new criteria of fair value measurement, there are still some problems in the financial markets, based on fair value reform's impact on commercial bank performance in China, and its impact on the commercial banks' stock price volatility, and gives recommendations.

Interest Rate Liberalization and Bank Performance in China

The current paper contributes to the empirical literature in bank profitability by being the first piece of research innovatively uses Boone indicator to test the competition in different banking markets namely deposit market, loan market and non-interest income market and further examine their impacts on profitability using a sample of Chinese commercial banks over the period 2003-2013 under a Generalized Method of Moments (GMM) one-step system estimator. In addition, the current study comprehensively examines different types of efficiencies and risk of Chinese commercial banks and further evaluates their impacts on bank profitability. The results show that cost efficiency, profit efficiency and liquidity risk are significantly related to bank profitability in China. Finally, the results show that higher competitive deposit market increases the Net Interest Margin (NIM) of Chinese commercial banks.

Market concentration, diversification and bank performance in China and India

Purpose The purpose of this paper is to examine the operational efficiency and effects of market concentration and diversification on the efficiency of Chinese and Indian banks in the 1997-2011 period. Design/methodology/approach This study employs the two-stage bootstrap procedure of Simar and Wilson (2007) to obtain valid inferences on the efficiency scores and the efficiency determinants. Findings Using data set for each country separately, the authors found that the bias-corrected cost efficiency displays an upward trend in Chinese and Indian banks. This trend is consistent with profit efficiency among Chinese banks, but the trend is unclear in Indian banks. Market concentration is negatively related to cost and profit efficiencies of Chinese banks. However, market concentration is positively associated with cost efficiency, but unrelated to profit efficiency of Indian banks. In Chinese banks, diversification of revenue, earning assets and non-lending earning assets are associated with increasing profit efficiency, but their effects to cost efficiency are not clear. In Indian banks, diversification of earning assets increases profit efficiency while there are cost efficiency losses from diversification of revenue and earning assets. Practical implications Bank regulators and supervisors in China should consider establishing policies to reduce market concentration and encourage diversification of revenue, earning assets and non-lending earning assets, while increasing concentration and diversification of earning assets should be encouraged in Indian banks. Originality/value To the best of the authors’ knowledge, this is the first study employing the double bootstrap procedure proposed by Simar and Wilson (2007) which can address the problem of the two-stage data envelopment analysis or SFA estimator in the efficiency literature on Chinese and Indian banks that efficiency scores obtained in the first stage are inter-dependent, and hence violating the basic assumption in regression analysis in the second stage.

Do Chinese banks perform better after IPOs?

Purpose – As part of the banking reform, major commercial banks in China went through initial public offerings (IPOs) in the past two decades. Has this change in the ownership structure led to improvement in their performance? With a comprehensive data set of Chinese banks over 1999-2010, the purpose of this paper is to investigate the effects of IPOs on bank performance in China. Design/methodology/approach – The authors employ a stochastic frontier approach (SFA) to measure bank efficiency and assess the selection and dynamic effects of public listing. Findings – The authors find strong selection effects. That is, banks that choose to go public are significantly more efficient than those that do not. However, the analysis of the dynamic effects shows no evidence that bank efficiency improves after going public, either in the short run or in the long run. The authors further look into bank performance around IPO events with non-parametric analysis and find that banks significantly outperform their counterparts prior to IPOs, but this superior performance disappears immediately after IPOs. This evidence is consistent with the “window dressing” hypothesis that firms time new issues to take advantage of windows of opportunity. Originality/value – This is the first study that addresses the performance of IPO banks measured with SFA in China after 2005 when the major Chinese banks were listed.

The Impact of Higher Interest Spread on the Performance of Banks in China

The study analyses how higher interest spread resulting from price control by the Chinese government affects banks’ profits in China. It provides in-depth empirical analyses of the determining factors of the banks’ profits and discusses how artificially set higher interest spread impacts banks’ performance in China. The paper uses a two-step model on the banking industry of China based on the dealership model developed by Ho and Saunders in 1981 and finds the oligopolistic market structure has a negative but not a significant relationship with the banks’ profits before 2000. However, the market structure has positive contributions to the banks’ profits after 2000 due to the higher interest spread artificially controlled by the government.

Bank ownership, privatization, and performance: Evidence from a transition country

This paper combines the static effect of ownership and the dynamic effect of privatization on bank performance in China over 1995–2010, reporting a significantly higher performance by private intermediaries – joint stock commercial banks and city commercial banks – relative to state-owned commercial banks. However, publicly traded banks, subject to multiple monitoring and vetting in capital markets, perform better regardless of ownership status. The privatization of banks has improved performance with respect to revenue inflow and efficiency gains in the short- or long-run (initial public offerings). The positive long-run effect is more relevant and significant for banking institutions with minority foreign ownership. Moreover, this paper innovatively estimates interest income efficiency and non-interest income efficiency at the same time. The results suggest that Chinese banks are much more efficient in generating interest income than raising non-interest revenue, although the latter aspect has improved significantly during the sample period.

Stock market volatility and bank performance in China

PurposeThe purpose of this paper is to evaluate the determinants of bank performance in China. In particular, the paper examines the effects of stock market volatility, competition and ownership on bank performance in China.Design/methodology/approachThe sample comprises a total of 11 banks (four state‐owned and seven joint‐stock commercial banks) listed in the Chinese Stock Exchanges. The period under consideration extends from 2003‐2009. The generalized methods of moments (GMM) difference and system estimators are applied.FindingsEmpirical results show that high level of stock market volatility can translate into higher return on equity (ROE) and excess return on equity (EROE). Rather than leading to improved profitability, the labour productivity has a negative impact on economic value added (EVA). Ownership does not have any effect on the profitability of Chinese banking industry. The bank profitability in terms of ROE and EROE is lower in the banking industry with higher competition. When using the GMM with ROE‐COC and ROE, the paper finds that high taxation has a negative impact on both state‐owned and joint‐stock banks, while the capital level is negatively related to joint‐stock commercial banks. With regards to the other two performance indicators (EVA and NIM), the result suggests that higher cost efficiency and labour productivity improve the performance of both state‐owned and joint‐stock commercial banks. Large volume of non‐traditional activity is the explanation of poor performance of state‐owned commercial banks, while higher credit risk, lower taxation and the mature banking industry are helpful in improving the performance of joint‐stock commercial banks.Research limitations/implicationsFurther research should examine other methods (e.g. the Rosse‐Panzar H statistic) to calculate the bank competition in China, and other determinants of bank performance in Asian countries and compare them with these results.Social implicationsThe current study has relevant policy implications. First, in order to increase the profit earned from the traditional loan‐deposit services, the Chinese banks should make loans to the high risk projects or companies, and control the expenses including both the operating and personnel expenses. Furthermore, the government and bank regulatory authority should make policy such as inject capital to SOCBs and write‐off NPLs for them to reduce the degree of competition in order to make banks have better performance.Originality/valueParticular emphasis is given on the investigation into the effects of stock market volatility, competition and ownership on bank performance in China while controlling for the most comprehensive bank‐specific, industry specific and macroeconomic variables.

Corporate governance and bank performance in China

This paper examines the effects of corporate governance on bank performance in China over the period 1995–2008. Bank performance has improved significantly and the mean profit efficiency level is estimated at 61%. The results suggest that differences in corporate governance have significant impacts on bank performance: banks with majority foreign ownership are most profitable while banks with majority state ownership are most unprofitable. We find no evidence that foreign minority ownership in domestic banks improves performance. Banks with more dispersed ownership are found to be more profit efficient.

The impact of higher interest spread on the performance of banks in China

The study analyses how higher interest spread resulting from price control by the Chinese government affects banks’ profits in China. It provides in-depth empirical analyses of the determining factors of the banks’ profits and discusses how artificially set higher interest spread impacts banks’ performance in China. The paper uses a two-step model on the banking industry of China based on the dealership model developed by Ho and Saunders in 1981 and finds the oligopolistic market structure has a negative but not a significant relationship with the banks’ profits before 2000. However, the market structure has positive contributions to the banks’ profits after 2000 due to the higher interest spread artificially controlled by the government.

Liquidity Creation, Bank Capital Structure and Bank Performance in China

Liquidity Creation, Bank Capital Structure and Bank Performance in China

Globalizations and bank performance in China

The paper provides for the first time empirical evidence on the impact of economic globalization on the performance of banks operating in the Chinese banking sector. The empirical findings from this study suggest that the well capitalized banks tend to be more profitable, while expense preference behavior exerts negative impact on bank profitability in China. By examining different components of economic globalization, we find that greater economic integration via higher trade flows, cultural proximity, and greater political globalization have significant and positive influence on bank profitability levels. The impacts of personal contacts and information flows seem to work in favour of the Chinese banks. During the period under study, the empirical findings seem to suggest that liberalization (restrictions) of the capital account exerts positive (negative) influence on the profitability of banks operating in the Chinese banking sector.

The Effects of Public Listing on the Performance of Banks in China

Chinese banks have been pushing further commercialization, corporate restructuring and public listing in recent years. The ten largest commercial banks in China have all been listed, among which nine went public in the past decade. This paper conducts an empirical investigation on how public listing affects the performance of Chinese banks. Particularly, we examine the pre-listing restructuring effect and the different effects of public listing locations such as Shanghai and Hong Kong, which have not received much attention in the literature. Our sample covers all the 16 listed banks in China and 17 other unlisted banks over the period of 1997-2008. Using a pooled cross-section regression, we compare three modified models built upon Berger et al. (2005) to consider the following three effects: 1) the static governance effect; 2) the selection effect and 3) the dynamic effect. We found that the public listing effect should be modeled as a dynamic process rather than a sudden structural change at a cut-off point, thus it is important to compare the banks’ performance during the pre-listing restructuring period with the after-listing period. Moreover, the public listing in Hong Kong is found to have more positive and persistent effects on banks’ performance in terms of both profitability and financial safety than the public listing in Mainland China. We also provide some tentative explanations for such different effects on banks’ performance, and discuss the implications to both policy makers and market participants.

Ownership Structure and Bank Performance in China: Does Ownership Concentration Matter?

This research investigates the relation between ownership structure and bank performance. We choose a sample of 49 large Chinese banks of different types over the 2003-2008 periods and evaluate the impact of the largest shareholder. Using ROA (Return on Assets) and ROE (Return on Equity) as profitability measures, the results show that there is no obvious correlation between ownership structure and bank performance in general, although state-owned commercial banks (SOCBs) might present a quadratic relationship with ROE. However, for joint-stock commercial banks (JSCBs) and city commercial banks (CCBs), we did not find such relationship.

Performance and Financial Ratios of Commercial Banks in Malaysia and China

This study aims to investigate the impact of bank-specific factors which include the liquidity, credit, capital, operating expenses and the size of commercial banks on their performance, which is measured by return on average assets (ROAA) and return on average equity (ROAE). The results imply that ratios employed in this study have different effects on the performance of banks in both countries, except credit and capital ratios. Operating ratios influence performance of banks in China, but this influence is not true for Malaysian banks regardless of the measure of performance.