City Commercial Banks In China Research Articles

Air pollution and bank risk taking: Evidence from China

In the context of frequent environmental events that attract widespread attention, this paper investigates the impact of air pollution on bank risk-taking. Using the data of 105 city commercial banks in China from 2014 to 2021, our findings suggest that air pollution leads banks to reduce risk-taking, which is primarily driven by the frequency of extreme pollution days. Banks in cities with higher government environmental concern and those with smaller asset scale and lower risk resistance are relatively more sensitive to air pollution. The transparent environmental supervision weakens the effect of air pollution on bank risk-taking.

Can the green finance reform and innovation pilot policy promote green technology innovation?—a novelty evidence from both polluting companies and city commercial banks in China

Can the green finance reform and innovation pilot policy promote green technology innovation?—a novelty evidence from both polluting companies and city commercial banks in China

Internet Finance and Risk-Taking of City Commercial Banks: Evidence From China

China’s urban commercial banks are more likely to face risks with the rapid development of Internet finance. However, few studies unfold the impact of Internet finance on the risk-taking level of urban commercial banks and explore their role path in depth. To study the relationship between the two and their path of action, this paper takes 62 city commercial banks in China from 2011 to 2020 as research objects and makes empirical tests by Stata. The intermediary effect model is used to study its impact path from the perspectives of assets, liabilities, and intermediate services. The conclusions are as follows: (1) Internet finance aggravates the risk-taking of urban commercial banks; (2) This effect shows heterogeneity in listed and non-listed, trans-region and non-trans-region urban commercial banks; (3) Net interest margin, debt structure, and non-interest income show the mediating effect when Internet finance affects the risk-taking of urban commercial banks. The results are beneficial for urban commercial banks to change their business strategies with their characteristics and achieve sustainable and healthy development.

Private capital holding, financial awareness of government and steadying operation of banks: Evidence from China.

Based on the panel data of 123 city commercial banks in China from 2007 to 2017, we use the dynamic panel system GMM estimation method to empirically test the impact of private capital holdings on the stability of city commercial banks. The results show that private capital holding improves the operating performance of city commercial banks, reduces the volatility of return on total assets, and is conducive to the stability of city commercial banks. Furthermore, the lack of financial awareness of local governments has led to the negative impact of private capital, that is, the stability of the banks has declined.

The Determinants of Profitability in the City Commercial Banks: Case of China

This study uses a panel data regression model to investigate how internal and external factors affect the profitability of city commercial banks in China. The research sample consists of 16 listed city commercial banks with an unbalanced dataset covering the time period within the period of 2008–2020. A panel data regression method is utilized to investigate the factors that influence the profitability of city commercial banks in China. There are several estimation methods in panel data, and the most commonly employed models are the fixed effects and random effects models. The pooled OLS model is often used for comparison for panel data regression, and the appropriate model will be determined by statistical hypothesis testing. The results show that internal explanatory variables such as bank size, capital adequacy, credit quality, and operating efficiency and external explanatory variables such as province GDP and inflation have a significant impact on the profitability of city commercial banks, while liquidity has no significant effect on the bank’s profitability. The paper contributes to the relevant literature by identifying the determinants of city commercial banks’ profitability considering the latest situation of the banking sector in China and provides practical implications from the perspective of improving bank profitability, which are important for both banking management and regulators and for the municipal and state.

Bank branching deregulation and the credit risk of the regional banking sector: Evidence from city commercial banks in China

From 2006 to 2011, with the change in regulatory policies, most regions of China relaxed restrictions on the intercity branching of city commercial banks, which led to a significant increase in the number of nonlocal branches of city commercial banks. We assess the impact of this bank branching deregulation on the credit risk of the regional banking sector across 286 prefecture-level cities in China. We find that deregulation has increased the credit risk of the regional banking sector in host cities by intensifying competition and encouraging risk-taking behaviors such as “lowering lending criteria” and “attracting deposits with higher interest”. Moreover, this effect becomes more pronounced in regions with a higher initial level of the loan-to-deposit ratio and regions with a higher initial level of competition in the banking sector.

Corporate Bond Defaults and Spillover Effects on Bank Risk—Evidence from City Commercial Banks in China

Corporate Bond Defaults and Spillover Effects on Bank Risk—Evidence from City Commercial Banks in China

Local Financing Platform Loan and Performance of City Commercial Banks: Evidence from City Commercial Banks in China

This paper investigates the relationship between optimum local financing platform loan and the perfor¬mance of CCBs using data of 68 CCBs during 2010 to 2018. Our results derived from panel threshold regression model show a positive and significant impact of local financing platform loan on the perfor¬mance of CCBs before the upper estimated thresholds. Once the local financing platform loan moves above the upper threshold level, then its impact becomes negative. Further, the same relationship is conducted in sub-samples of eastern, central and western regions. Our findings suggest the policymak¬ers that maintains ideal local financing platform loan is effective to encourage the performance of CCBs.

Does the target market affect bank performance? Evidence from the geographic diversification of city commercial banks in China

After the opening up of the banking sector to domestic and foreign capitals which is approved by the Chinese government, the China Banking Regulatory Commission (CBRC) has permitted city commercial banks to diversify geographically. Since this deregulation in 2006, city commercial banks began to geographically diversify to occupy the market and acquire more financial resources. To examine the causal relationship between geographical diversification and bank performance, we construct an exogenous geographical diversification instrument using the gravity-deregulation model and a policy shock. We find that bank geographical diversification negatively affects bank performance. Moreover, we conduct some mechanism tests in the Chinese context. We find that the target market with several large- and medium-sized banks and a high level of local protectionism in the target market decreases the performance of city commercial banks. Finally, cross-sectional analyses show that the impact of geographical diversification on banks’ performance is more notable among city commercial banks that are younger, and have a lower capital adequacy ratio and a higher non-performing loan ratio.

Fintech and Banking Efficiency: Evidence from Chinese Commercial Banks

Will the development of FinTech improve the efficiency of commercial banks in China? In recent years, FinTech has been continuously developing and applying to the financial industry which has brought opportunities and challenges to the operation and management of commercial banks in China. We focus on the empirical analysis of the impact of FinTech on the operating efficiency of commercial banks. By examining Chinese commercial banks as an empirical sample, we find that the development of FinTech has a significant role in promoting the efficiency of Chinese commercial banks. On this basis, we further compared the feedback of changes in the efficiency of different Chinese commercial banks to the development of FinTech. Accordingly, the efficiency changes of city commercial banks in China have been most significantly affected by the development of FinTech. Based on the empirical results, the financial development elements are further added to explore the geographical characteristics of city commercial banks. We find that the development of FinTech has a stronger effect on the efficiency change of city commercial banks in areas with higher levels of financial development.

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.

Analyzing efficiencies of city commercial banks in China: An application of the bootstrapped DEA approach

City commercial banks (CCBs) have continued to grow in support of small- and medium-size enterprises (SMEs), thus improving the misallocation of capital and helping to accelerate China's tremendous economic growth. This study uses bootstrapped data envelopment analysis (DEA) to statistically test the property of returns to scale by taking into account undesirable outputs in order to employ the appropriate model for statistically inferencing the characteristics of these CCBs. Employing a dataset from Bankfocus that covers 101 CCBs for the period 2015–2017, the returns to scale test supports technology as exhibiting variable returns to scale. The partitioning around medoids (PAM) algorithm, based on bootstrapped DEA scores, clusters China's CCBs into three groups: Cluster 1 contains half of the superior foreign-owned banks and half of those competitive local CCBs being located in the coast region, while Cluster 2 and Cluster 3 consist primarily of domestic CCBs associated with similar characteristics in locations and owner-types, where the former outperforms the latter. Other findings show that (1) biased upward efficiencies may provide incorrect information and misguide managerial and/or policy implications, and that (2) ignoring the effort by CCBs at absorbing deposits leads to significantly different results.

Local financial development and constraints on domestic private-firm exports: Evidence from city commercial banks in China

We show that the development of city commercial banks (CCBs) across China has alleviated the constraints from China’s domestic financial-market inefficiency on the export activity of domestic private firms. Considering the export behavior of 260 cities between 1997 and 2012, we confirm the well-established under-performance of domestic private firms in financially more vulnerable sectors compared to foreign affiliates in China. We show that a greater number of CCB branches raises domestic private-firm exports disproportionately more in financially-dependent sectors, which is in line with improved financing conditions for these companies. This improvement in export performance appears to result from both an increase in the number of destination countries and a decline in prices. CCB development is moreover associated with a reduction in the systematic disadvantage of domestic private firms relative to foreign-owned firms in export markets resulting from their greater financial exclusion. We, however, also find that private-firm export performance has deteriorated relative to that of state-owned firms, casting doubt on the ability of CCBs to end the systematic bias of lending in favor of the state sector.

Impacts of Ownership Balance and Nonexecutive Directors on Bank Performance and Risk Taking: Evidence from City Commercial Banks in China

ABSTRACTThis paper investigates the impacts of nongovernmental stake, ownership balance, and nonexecutive directors on bank performance and risk taking in city commercial banks (CCBs) in China. We find that ownership balance can improve CCBs’ financial performance and reduce their bankruptcy risk as well as nonperforming loan level. Nonexecutive directors can help reduce bankruptcy risk, but have no significant effect on performance or nonperforming loans. The impacts of ownership balance and nonexecutive directors become more prominent when the nongovernmental stake is relatively high, suggesting that mixed ownership reform can promote bank performance and risk control via these two avenues.

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.