Chinese City Commercial Banks Research Articles

Temperature variability, natural disasters and bank systemic risk: Evidence from Chinese city commercial banks

This paper examines the impact of temperature variability on bank systemic risk and the mediating effect of natural disasters. By employing data of 105 Chinese city commercial banks and 30 provinces from 2008 to 2020, we find a positive relationship between temperature variability and bank systemic risk, as well as the mediating effect of natural disasters. Moreover, heterogeneity analysis demonstrates that the relationship between temperature variability and bank systemic risk is only significant for banks in regions with small seasonal temperature differences and southern provinces of China.

Enhancing customer segmentation in Chinese city commercial banks: A machine learning approach

This paper examines the progression and implementation of customer segmentation theory in banking, focusing particularly on an improved RFM (Recency, Frequency, Monetary) model. It highlights the essential role of identifying high-value customers for the sustained growth and success of commercial banks. The study elucidates the pivotal role of Customer Relationship Management (CRM) and detailed management in the realm of retail banking as crucial for achieving success. By analyzing real-case scenarios from the Chinese banking sector, this paper illuminates the evolving nature of customer segmentation theory and its varied applications. The objective is to provide insightful and practical recommendations for commercial banks aiming to develop or enhance their customer segmentation frameworks. This research contributes both to the theoretical understanding of customer segmentation and offers a pragmatic guide for banks seeking to improve their customer management approaches in a market that is becoming increasingly competitive.

Large private shareholders, industrial policies and industrial loans of city commercial banks: Evidence from China.

We show that large private shareholders have an information advantage about their industry; this can alleviate the information asymmetry suffered by banks, and consequently, increase bank lending to these shareholders' industry. Using a sample of Chinese city commercial banks, we show that an increase in the large private shareholders' shareholding of banks increases bank lending to these shareholders' industry. Importantly, using Chinese local government industrial policy as a moderator, we find that industrial policies have a positive and significant moderating effect on the relationship between large private shareholders and banks' industry-specific lending. This relationship strengthens when local industrial policy supports these shareholders' industry. This helps explain why banks prefer the industries to which their large private shareholders belong to and how industrial policy affects bank credit allocation.

The influence of the largest private shareholder on bank loans: Evidence from China.

We point out that the largest private shareholders can use their information advantage of the industry to influence banks’ industry lending behavior. Using a sample of Chinese city commercial banks, we find that increasing of ownership stake of the largest private shareholders leads banks to lend more to their industries. Interestingly, the largest state-owned shareholders do not have this effect. More importantly, we confirmed the channel of the information advantage by analyzing the bank’s industry NPL ratio and the listed company’s maximum loan amount in the bank. Of course, the effect of the largest private shareholders is achieved by intervening in board decisions. In addition, the ownership structure can influence this effect.

Do Commercial Banks Benefit From Bank-FinTech Strategic Collaboration?

The banking sector has changed fundamentally as digital transformation is enabling new technology-driven banking business and creating novel customer requirements. Embracing bank-FinTech strategic collaboration (FSC) has been particularly vital to digital transformation of Chinese city commercial bank. The aim of this paper is to study the impact of FSC on the efficiency of city commercial banks. Using data from Chinese city commercial banks between 2014 and 2019, we first measure bank efficiency scores using stochastic frontier approach. Moreover, we employ the propensity score matching approach and the difference in difference estimation to explore the effect of FSC on bank efficiency. We find that FSC significantly improves bank cost and interest revenue efficiency in the aggregate. Our results also indicate that the positive relationship between FSC and cost efficiency is negatively associated with bank ownership concentration. In addition, the positive effects of FSC on revenue efficiency are weaker in state-owned city banks than in non-state-owned city banks.

The impact of the macroeconomic factors in the bank efficiency: Evidence from the Chinese city banks

This study uses stochastic frontier analysis to examine the impact of the regional disparities in the cost and profit efficiency for a sample of city commercial banks in China from 2005 to 2014. The results indicate that bank efficiency of Chinese City Commercial banks is positively correlated to the per capital GDP but negatively linked to urban population ratio. However, compared the eastern and non-eastern regions, there is a significant difference in effects of macroeconomic factors for bank efficiency. The macroeconomic conditions influence the efficiency of Chinese City Commercial banks in eastern regions are more significant than the others.

Research on Competitiveness of Shengjing Bank under Factor Analysis

Since 2017, the world economic environment has changed profoundly, and Chinese city commercial banks, especially Shengjing Bank, have been deeply affected by it. Therefore, Shengjing Bank's 2018 interim report states that it is necessary to comprehensively strengthen risk management, to innovate intermediate businesses and other business structures, and improve Beijing Bank's overall competitiveness. In order to compare the competitiveness level of Shengjing Bank in recent years, this article selects 23 city commercial banks as reference objects, and intends to use the factor analysis method to use Spss software to collect the 13 financial indicators of 24 city commercial banks from 2015 to 2017. Comprehensive analysis of the data, taking into account the indicators of all parties, draw conclusions, and give specific suggestions for the problems existing in Shengjing Bank. The study found that the competitiveness level of Shengjing Bank did decline in 2017, which should attract the attention of senior management of the bank.

Shadow Banking, Bank Ownership, and Bank Efficiency in China

ABSTRACT This study uses 15 years of bank data and a one-stage stochastic frontier analysis framework to examine how shadow banking affects the profit and cost efficiency of Chinese banks. Our results indicate that shadow banking is negatively related to both profit and cost efficiency and positively related to earnings volatility, credit risk and liquidity risk of the Chinese banks. In examining the performance of foreign banks with that of local Chinese city commercial banks, we find that foreign banks in China are less profit- and cost-efficient, supporting the home-field-advantage hypothesis that domestic banks are more efficient than foreign banks.

Estimation of potential gains from bank mergers: A novel two-stage cost efficiency DEA model

This paper develops a novel two-stage cost efficiency model to estimate and decompose the potential gains from Mergers and Acquisitions (M&As). In this model, a hypothetical DMU is defined as a combination of two or more candidate DMUs. The hypothetical DMU would surpass the traditional Production Possibility Set (PPS). In order to solve the problem, a Merger Production Possibility Set (PPSM) is constructed. The model minimizes the total cost of the hypothetical DMU while maintaining its outputs at the current level, and estimates the overall merger efficiency by comparing its minimal total cost with its actual cost. Moreover, the overall merger efficiency could be decomposed into technical efficiency, harmony efficiency, and scale efficiency. We show that the model can be extended to a two-stage structure and these efficiencies can be decomposed to both sub-systems. To show the usefulness of the proposed approach, we applied it to a real dataset of top 20 most competitive Chinese City Commercial Banks (CCBs). We concluded that (1) there exist considerably potential gains for the proposed merged banks. (2) It is also shown that the main impact on potential merger gains are from technical and harmony efficiency. (3) As an interesting result we found that the scale effect works against the merger, indicating that it is not favorable for a full-scale merger.

MEN, Chuang, The Formation and Management of Chinese City Commercial Banks

MEN, Chuang, The Formation and Management of Chinese City Commercial Banks

Regional economic development, strategic investors, and efficiency of Chinese city commercial banks

We investigate the effect of strategic investors on bank efficiency in the context of regional economic development. The data on Chinese city commercial banks operating regionally are well-suited for the study. Our findings suggest that strategic investors significantly increase efficiency in Chinese city commercial banks, while the effect of strategic investors on the efficiency of Chinese city commercial banks is negatively correlated to the level of regional economic development. The negative correlation of the effect of strategic investors on Chinese city commercial banks’ efficiency with regional economic development may be explained by the mix of local official promotion system and city commercial banks’ governance structure.

Regional Economic Development, Strategic Investors, and Efficiency in Chinese City Commercial Banks

We investigate the impact of strategic investors on bank efficiency in the context of regional economic development. The data on Chinese city commercial banks operating regionally are well-suited for the study. Findings suggest that strategic investors significantly increase efficiency in Chinese city commercial banks; the impact of strategic investors on the efficiency of Chinese city commercial banks is negatively correlated to the level of regional economic development. The negative correlation of the impact of strategic investors on Chinese city commercial banks’ efficiency with regional economic development may be explained by the mix of the local official promotion system and the city commercial banks’ governance structure.

The Correlation between CRM Strategy for City Commercial Banks and Core Competency Cultivation-Evidence from China

In order to reveal the incentive functions of customer relationship management (CRM) strategy in the process of core competency cultivation, the structure equation modeling (SEM) is used in this paper. By research hypothesis, model deduction, reliability and verification test, and model checking, SEM can effectively reveal the correlation between CRM strategy and core competence cultivation in Chinese city commercial banks. For illustration, the collected copies are 300 banks, and 298 copies are valid. The sample ratio of sample data and indicators is 6:1, which meets the basic requirements for structural equation test. The empirical results show that the reliability and validity in the research measurement model are quite well and the reliability and validity in the model are also quite well. The empirical research has revealed the CRM-related strategy microcosmic mechanism in core competency cultivation, which can provide the effective theoretical references and support for banks to further strengthen CRM strategy and raise management efficiency.

The Correlation between CRM Strategy for City Commercial Banks and Core Competency Cultivation-Evidence from China

In order to reveal the incentive functions of customer relationship management (CRM) strategy in the process of core competency cultivation, the structure equation modeling (SEM) is used in this paper. By research hypothesis, model deduction, reliability and verification test, and model checking, SEM can effectively reveal the correlation between CRM strategy and core competence cultivation in Chinese city commercial banks. For illustration, the collected copies are 300 banks, and 298 copies are valid. The sample ratio of sample data and indicators is 6:1, which meets the basic requirements for structural equation test. The empirical results show that the reliability and validity in the research measurement model are quite well and the reliability and validity in the model are also quite well. The empirical research has revealed the CRM-related strategy microcosmic mechanism in core competency cultivation, which can provide the effective theoretical references and support for banks to further strengthen CRM strategy and raise management efficiency.

Bank risk taking, efficiency, and law enforcement: Evidence from Chinese city commercial banks

Abstract We investigate bank risk taking, efficiency and their relation to law enforcement using a unique sample of 133 Chinese city commercial banks across 31 regions for the 1999–2008 period. We find that stronger law enforcement tends to promote greater bank risk taking in the region. Furthermore, employing a stochastic distance function approach, our analysis shows that the performance of Chinese city commercial banks, as measured by bank efficiency, is heavily influenced by the effectiveness of law enforcement in the region. Better legal environment, higher efficiency in the legal system, and stronger protection of intellectual property right are associated with a higher level of efficiency among these banks.

The Impact of Local Economic Growth on Bank Profits Efficiency: Evidence from City Commercial Banks in China

Chinese city commercial banks are well-suited for exploring the impact of local economic growth on bank performance. We find that local economic growth has a negative impact on profits efficiency of city commercial bank. Moreover, the magnitude of the impact is very large. The findings suggest that a moderate decline in local economic growth may increase significantly the banking performance. The nexus between the control system of local officials and internal governance structure of city commercial banks in China may explain the results. Our study contributes to thin literature on relationship between local economic growth and bank performance.

Foreign investments in China's local banking sector – the Australian experience

This article investigates the experience of Australian banks who invested in China's city commercial banks. Special emphasis is paid to corporate governance before and after they invested in the Chinese banks. Interviews were conducted with senior personnel from the ANZ (Australia and New Zealand) Banking Group who invested in the Tianjin City Commercial Bank and the Shanghai Rural Commercial Bank and the Commonwealth Bank of Australia who invested in the Hangzhou City Commercial Bank and the Jinan City Commercial bank. Our investigations showed that corporate governance in the Chinese city commercial banks was minimal before the Australian banks invested. Since then, there have been substantial improvements but differences still persist. The article also outlines the steps and strategies adopted by the two banks to improve corporate governance.