Chinese Banks Research Articles

FinTech Development, Shadow Banking, and Stock Market Activity in China: Insights from a TVP-SV-VAR Modeling

FinTech Development, Shadow Banking, and Stock Market Activity in China: Insights from a TVP-SV-VAR Modeling

ЦИФРОВИЗАЦИЯ БАНКА КИТАЯ (BANK OF CHINA): ПРОБЛЕМЫ И ВОЗМОЖНОСТИ

The purpose of the study is to consider digital solutions and financial tools that are being introduced into the practice of the Chinese banking sector during its digitalization on the example of the Bank of China. We considered the financial result and competitiveness of the bank, identifeed difficulties in the digitalization. The study used materials from the Bank of China itself, as well as the statistical database of Chinese fintech, and materials from scientific reports. Analysis and synthesis, comparative analysis, extrapolation techniques, and forecasting were used for the study. It is considered how the Bank of China manages to carry out “shock-free” digitalization, maintaining and increasing its client base. The bank’s unique strategy and the challenges of digital transition are analyzed. The conclusion emphasizes the need to maintain the pace of digital development of the bank, despite the difficulties that have arisen in the Chinese economy and domestic politics.

Research on the multifractal volatility of Chinese banks based on the synthetic minority oversampling technique, edited nearest neighbors and long short-term memory

Research on the multifractal volatility of Chinese banks based on the synthetic minority oversampling technique, edited nearest neighbors and long short-term memory

Methods for Improving the Non-Performing Loan Ratio of Chinese Banks Based on Influencing Factors Analysis

Methods for Improving the Non-Performing Loan Ratio of Chinese Banks Based on Influencing Factors Analysis

The double-edged effect of bank liquidity creation efficiency on systemic risk: Evidence from China.

Bank liquidity creation fosters economic growth while entailing liquidity mismatch risk. This study explores whether improving bank efficiency during liquidity creation can mitigate systemic risks. We propose a bank liquidity creation efficiency measure based on a stochastic frontier approach to analyze Chinese commercial listed banks from 2000-2021. Through systemic risk decomposition, we find that higher profit efficiency alleviates individual tail risk but strengthens system linkage for Chinese banks, representing a double-edged effect. Further analysis reveals that high profit efficiency is associated with more investment in real estate and higher risk-taking on loans. Banks' digital transformation can help alleviate the dilemma of being too connected to the system. The results provide implications for emerging markets to prevent risk and promote economic growth.

An Exploration of the Risk Management of Financial Derivatives in Chinese Commercial Banks

Financial derivatives are products based on the innovation of financial products, which can be used for risk avoidance, investment management, etc. In recent years, with the rapid development of the financial market, the development of financial derivatives has become more and more diversified in Chinese commercial banks, ushering in new development opportunities. This paper introduces financial derivatives, discusses the risk management of financial derivatives in Chinese commercial banks, and compares the financial derivatives of commercial banks in China with those in the United States. According to the analysis, it can be concluded that the existing problems in risk management include the lack of rational consumers in China's financial trading market, the unregulated market system, the high risk of purchasing financial derivatives products, and the internal management problems of Chinese banks. In view of these problems, three effective methods are proposed for optimization, namely strengthening the training of human resources, establishing a sound financial regulatory system, and enhancing the internal management of banks.

Analysis and Prediction of the China Securities Bank Index Based on the ARIMA Model

Banking is crucial for a country's financial system. Also, the performance of banks can indicate the confidence of investors in the financial market and the overall situation of the country's economy to a certain extent. As the CSBI index reflects the overall performance of Chinese banking stocks, predicting the relevant price movements can predict how the banking industry will move over time to come and help investors make investment decisions. Under this circumstance, the paper selects the CSBI closing price from January 2th, 2019 to August 11th, 2023 and build the ARIMA (0,1,0) model to make predictions based on these data. The conclusion shows that the ARIMA model has good forecasting abilities in the short term, but its timeliness is relatively poor in the long term. Finally, on the basis of these analyses, the paper summarizes the development trend of the industry in the short term, lists the reasons for the inaccuracy of the long-term forecast from different aspects and provides suggestions for investors.

Identity Construction in Website News Discourse: A Corpus-assisted Comparative Study of Top 10 American and Chinese Banking Corporations

The post-COVID-19 period has witnessed the fierce trade war between America and China as the two supreme world powers in the global economic meltdown. Under these circumstances, it is essential that banking corporations due to their significant role in economic transformation and resuscitation should construct a strategic identity in the global market. In light of this, this research aims to find out what key attributes of corporate identity are projected for American banking corporations (hereinafter referred to ABCs) and for Chinese banking corporations (hereinafter referred to CBCs) in website news discourse and to highlight their similarities and differences so as to offer insight into future development. To achieve this, this research adopted monologic perspectives and two corpora were built; following MIP, a detailed systematic cognitive metaphor analysis was carried out by application of Wmatrix to examine how the three metaphors in the pyramid hierarchy (concrete metaphors, conceptual metaphors, abstract conceptual keys) collaborate with each other for semantic representation. The findings show that Both ABCs and CBCs attach strategic significance to metaphorical representation of corporate identity, whose different frequency and distribution of concrete metaphors in the semantic field THE BODY AND THE INDIVIDUAL in accordance with USAS demonstrates different attributes of corporate identity; that there is one shared abstract schema: BANKING CORPORATIONS ARE ORGANISMS; that while ABCs are constructed kings who enjoy highest social reputation and projected as doctors who can diagnose their own symptoms, CBCs are constructed as hunks who have saved many people’s lives in emergency and projected as patients who have gone into therapy due to serious illness. The paper also offers empirical and theoretical implications for future research.

The impact of banking regulatory policies on the expansion of shadow banking business in China

To better examine how shadow banking activities are affected by banking regulation, this paper uses the implementation of new regulatory standards in China's banking sector in 2011 as a quasi-natural experiment to test whether China's banking regulatory policies were effective in curbing shadow banking activities from 2007 to 2019 using data on banks' entrusted loans to measure the size of shadow banking business. The findings of this study are as follows: Firstly, the new regulatory standards had effectively inhibited the development of shadow banking business such as entrusted loans. Mechanism analysis showes that CAR had a significant positive impact on entrusted loans, once the CAR fell, the entrusted loans decreased. Meanwhile, the higher the LIR was, the more shadow banking activities Chinese banks were likely to engage in. Further insight reveales that among banks with larger assets and higher profitability, the impact of the new regulatory policies on shadow banking business was more significant. The results remain robust when the paper also consideres the policies issued in 2017 for shadow banking. The findings of this paper demonstrate the actual effect of China's regulation on shadow banking from a micro perspective and provide a scientific and theoretical basis for the implementation of regulatory policies.

Analyzing Chinese banking performance with a trigonometric envelopment analysis for ideal solutions model

Abstract Accepted by: Prof. Ali Emrouznejad Non-parametric data envelopment analysis (DEA) is susceptible to the curse of dimensionality, a challenge that can be mitigated through the use of the multi-criteria decision-making (MCDM) method. Conversely, DEA can overcome the limitations of the MCDM method by defining the weights of the decision-making unit to calculate the data envelop. This study addresses this issue by introducing a novel model, the Trigonometric Envelopment Analysis for Ideal Solutions (TEA-IS). TEA-IS combines DEA and the Technique for Order Performance by Similarity to Ideal Solution approaches. The proposed method is employed to assess the efficiency and performance of 367 Chinese banks over a 19-year period using various financial variables. The TEA-IS model leverages machine learning techniques to predict positive or negative outcomes for Chinese banks, taking into account various influencing factors. Our results indicate that TEA-IS scores demonstrate superior discriminatory power and reliability compared with non-parametric and MCDM methods. Furthermore, our findings reveal the presence of synergy amongst Chinese banks and illustrate a pattern of volatility in the Chinese banking industry’s performance. Notably, performance improved from 2000 to 2005, declined during the period from 2006 to 2013 and subsequently experienced a recovery until 2018. The majority of Chinese banks in the sample are categorized as medium performers with lower synergy levels. Additionally, the study underscores the positive impact of bank listing and age on bank performance, suggesting that regional banks outperform domestic ones.

Financial technology, inclusive finance and bank performance

In recent years, the Chinese banking industry has increasingly used financial technology (FinTech) to increase the credit supply to key areas of inclusive finance, as “impulse” and “fee reduction and profit-sharing” behaviours have exerted pressure on bank performance. This paper analyses the impacts of FinTech on bank performance and the risk adjustment mechanism of FinTech.The results show that, first, when banks issue inclusive loans, the phenomenon of increasing the balance without a corresponding increase in profits, or even resulting in no profits develops because of cost-benefit asymmetry. “Doing business at a loss” negatively impacts bank performance; these losses are primarily associated with small and micro enterprises (SMEs). Second, digital inclusive finance effectively mitigates the negative impacts of traditional inclusive loans, and FinTech boosts bank performance. Third, the positive effects of FinTech are attributable to risk adjustment effects that reduce information asymmetry and transaction costs.This paper demonstrates that digitalisation empowered by FinTech has improved the service efficiency and customer experience of inclusive finance, as well as other business income and bank performance. Banks must be cautious when analysing the risks and benefits afforded by internet platform flow-data. Each head office should formulate a digital financial strategy and unify the deployment of innovative FinTech applications. Bank branches should promote such transformation but must engage in digital inclusive finance differently, based on the level of local FinTech development. This optimises the allocation of credit resources.

Risk-adjusted efficiency and innovation: an examination of systematic difference and convergence among BRIC banks

We argue that technological progress and technology diffusion is improving innovation the banking industry, leading to a potential steady-state equilibrium in operational efficiency and innovation across banks with similar characteristics. Using the latest meta-frontier method, this study examined BRIC banks during the period from 2000 to 2020. We found that Indian and Brazilian banks are more innovative in reducing costs, whereas Indian and Chinese banks are more cost efficient. Chinese, Russian, Indian, and Brazilian banks rank first to fourth in profit efficiency and profit-making innovation, respectively. Risk-taking boosts group cost and profit efficiencies and profit-making innovation but reduces cost-reducing innovation in each country. BRIC banks diverged in innovation during the analysis period but slowly converged after the 2008 crisis. Reform policies, adoption of production technology, formulating regulations and investing in human capital and technologies are crucial for less efficient and innovative banks to catch-up with frontier banks.

Does cycle superposition amplify bank liquidity risk under different levels of financial openness? Empirical evidence from China

PurposeThis paper aims to explore the impact of cycle superposition on bank liquidity risk under different levels of financial openness so that banks can better manage their liquidity risk. Meanwhile, it can also provide some ideas for banks in other emerging economies to better cope with the shocks of the global financial cycle.Design/methodology/approachEmploying the monthly data of 16 commercial banks in China from 2005 to 2021 and based on the time-varying parameter vector autoregressive model with stochastic volatility (TVP-SV-VAR) model, the authors first examine whether the cycle superposition can magnify the impact of China's financial cycle on bank liquidity risk. Subsequently, the authors investigate the impact of different levels of financial openness on cycle superposition amplification. Finally, the shock of the financial cycle of the world's major economies on the liquidity risk of Chinese banks is also empirically analyzed.FindingsCycle superposition can magnify the impact of China's financial cycle on bank liquidity risk. However, there are significant differences under different levels of financial openness. Compared with low financial openness, in the period of high financial openness, the magnifying effect of cycle superposition is strengthened in the short term but obviously weakened in the long run. In addition, the authors' findings also demonstrate that although the United States is the main shock country, the influence of other developed economies, such as Japan and Eurozone countries, cannot be ignored.Originality/valueFirstly, the cycle superposition index is constructed. Secondly, the authors supplement the literature by providing evidence that the association between cycle superposition and bank liquidity risk also depends on financial openness. Finally, the dominant countries of the global financial cycle have been rejudged.

Analysis of the Investment Value of China's Banking Stocks

In order to thoroughly assess the valuation levels of the stocks of the three banks from three perspectives, this article gathers the financial information and market price information of three Chinese state-owned commercial banks. It then analyzes the stocks of the Chinese banking sector using a variety of indicators, including the price-earnings ratio and the price-to-book ratio. In the recent investment performance, it discusses the changing trend and fluctuation range of its investment value. As the core component of the economic system, the banking industry plays a vital role in the modern financial system. As an intermediary of funds, the banking industry not only facilitates the flow of funds from depositors to investors, enterprises, and individuals, but also plays a role in capital allocation, risk diversification, and credit creation. A stable banking system helps maintain financial stability, promote investment, and create jobs. Therefore, analyzing the value of banking stocks from different angles can provide different types of investors with insight into the financial situation and help them make wise investment decisions.

Institutional mosaic of financial institutions in the late Qing China and synthesis of organizational forms: from piaohao and qianzhuang to the central bank

Objective: to determine the peculiarities of forming the banking system in late imperial China in terms of the interaction between traditional Chinese banking institutions, imported institutional forms, and state reform strategies. Methods: qualitative methods (comparative analysis, generalization), historical and genetic method.Results: based on a wide array of historical data, the history of the Chinese banking system development during the Qin dynasty decline is demonstrated. By the time of the Chinese economy “forced opening” by Western powers during the Opium Wars, China had its own quasi-banking institutions based on the established clan networks of trade organizations that covered the credit needs of the traditional economy. The local development of modern industries in China required modern approaches to the organization of banking activities. The lacuna was filled by foreign banks, which actually monopolized modern banking in China, and later by state-owned banks. It is shown that by the end of the Qing period all three participants of the banking industry – traditional banks, foreign banks and state banks – covered the needs of the Chinese economy. It is concluded that the banking industry of the late imperial period was a mosaic institutional fabric, combining both traditional and westernized elements and embedding clan ties traditional for China.Scientific novelty: the article is the first attempt in Russia to comprehensively examine the evolution of the banking system of late Qing China.Practical significance: the main conclusions of the article can be used in scientific and pedagogical activities in the study of economic history of traditional China, and may enrich the concepts of institutional economics concerning the limits and possibilities of institutional transformations.

Bank behavior due to a buildup in Chinese nonperforming loans

We study 33 Chinese banks from December 2009 to December 2020 to examine the moral hazard behavior of Chinese banks from the perspective of nonperforming loans (NPLs). The results show that banks with low returns are more likely to engage in risk-taking behavior and have a high number of NPLs. The government could adopt regulations that would help joint stock banks to be more prudential and encourage city and rural banks to take more risks.

Trust in a ‘trust-free’ system: Blockchain acceptance in the banking and finance sector

Blockchain is a disruptive technology that revolutionizes traditional business models and revamps relationships between financial transaction counterparties. While the volume of literature on blockchains has been rapidly growing in recent years, research on the relationship between trust and blockchain acceptance at the individual level is underexplored. Our study aims to fill this research gap by investigating the determinants of blockchain acceptance in the banking and finance sector from the affordance theory. We extend UTAUT model with trust-related constructs (trust in technology and trust among communities), advocate a research framework to examine the impact of trust on blockchain acceptance. Quantitative data were collected from 218 employees at Chinese banks, and structural equation modeling was applied to analyze the data. Our empirical analysis revealed that these trust relationships are positively associated with the intention to accept blockchain technology. The results of polynomial regressions and the response surface support the significance of the trust congruence effect. We make a theoretical contribution by extending the UTAUT with two trust relationships in a Fintech context. The results can also be used as a guideline for the practitioners, inspiring them to consider the critical determinants of blockchains acceptance in blockchain implementation.

Stabilizing leverage, financial technology innovation, and commercial bank risks: Evidence from China

With the rapid development of financial technology (FinTech), balancing FinTech innovation with capital risk management is an emerging issue for banks and regulators. To address this issue, we investigate FinTech's impact on the leverage risks of commercial banks. First, we formulate a theoretical model about the optimal leverage ratio determination for commercial banks within the context of FinTech development. We then conduct an empirical study using Chinese banking microdata from 2005 to 2020. Furthermore, we perform robustness tests by varying FinTech indexes. Our empirical results reveal that (1) an optimal leverage ratio exists that minimizes the risks of commercial banks. Furthermore, (2) FinTech helps banks balance their asset allocation structure, playing a countercyclical role in risk reduction. Finally, (3) FinTech can improve profitability and decrease leverage risks of large, medium-sized, and listed banks. These findings can help banks enhance their FinTech innovation capabilities and regulators prevent governance risks.

Shadow banking Regulation and the stock price synchronicity --A quasi-natural experiment based on China's new asset management regulation

Shadow banking has somewhat compensated for China's lack of formal financial development. However, it may also amplify the financial system's risks, which runs counter to the initial expectation of macroprudential management. With the regulation of shadow banking in China under the New Asset Management Regulation (NAMR), this paper investigates the impact of shadow banking regulation on the stock price synchronicity of China's A-share listed companies and its mechanism from 2013 to 2021. The mechanism test finds that shadow banking regulation can reduce stock price synchronicity by reducing firms' agency costs and improving information transparency. Our study enriches the related research on shadow banking regulation. It provides evidence on the microeconomic consequences of shadow banking from the perspective of stock price synchronicity for other developing countries and emerging economies.

Study on liquidity risk of commercial banks

China’s banking system, a product of its planned economy, is a means for China to implement its economic and financial development and consolidate its role in the global economy. Recently, this system has been decentralised by adapting specific regulations to international standards. Against this backdrop, the development of inter-bank activities has played a vital role in the rapid expansion of Chinese banking sector’s assets. This study, uses data from 34 listed commercial banks between 2010 and 2018, to analyse the effect of interbank activities on commercial banks’ liquidity risk using a panel data model. This determines whether the effects are the same for different commercial banks. The study concludes that the expansion of interbank activities has increased commercial banks' liquidity risk, and that this effect is more significant in joint-stock banks than in urban commercial banks. Therefore, commercial banks should sensibly position their interbank development model, conduct their interbank business prudently and rationally, and continuously strengthen their risk control measures. The supervisory authorities must continue to strengthen supervision of interbank activities and prevent funds from being de-realised.