Performance Of Chinese Commercial Banks Research Articles

A study on the operational performance of Chinese commercial banks considering time lag effects: A dynamic three-stage time-lag cross-efficiency model

In the multi-period and multi-stage operational process of banks, fixed assets, deposits, and non-performing loans (NPLs) are elements with time lag effects. Not or only considering one time-lag element could result in biased efficiency evaluation results. Therefore, this study proposes a dynamic three-stage time-lag range directional measure (RDM) cross-efficiency model that considers three types of time-lag elements simultaneously to assess the operational performance of banks more accurately and comprehensively. Moreover, the proposed model takes into account the following factors: non-oriented, cross-efficiency, negative data, and undesirable elements. This study conducts in-depth research on the operational performance of Chinese commercial banks and obtains the following observations. (1) The change degrees of different types of banks influenced by the different time-lag elements were inconsistent. (2) Three time-lag elements significantly influenced the operational performance of four types of banks, which was most significant for state-owned commercial banks. (3) All banks were assessed as inefficient during 2017–2021, and the highest average efficiency was found in the capital allocation stage, while the profitability stage ranked at the bottom. (4) Rural and joint-stock commercial banks had the best performance in all sub-stages, while state-owned commercial banks had the worst performance.

The Impact of Revenue Diversification on the Performance of Chinese Commercial Banks

Since the 18th National Congress of the Party, the intensity of financial reforms has been continuously increasing. Against this backdrop, the competitive environment within China's banking sector has become more challenging, leading various banks to confront a spectrum of challenges while also encountering opportunities for growth. With the advancement of marketization, numerous banks have engaged in various forms of operations. This paper employs the Generalized Method of Moments (GMM) dynamic panel model to investigate the impact of diversified operations on the performance of Chinese banks. It posits that the advantages of contemporary diversified operations have not been fully realized due to factors such as operational costs and risk exposure. Accordingly, Chinese commercial banks should devise enhanced risk management strategies, bolster oversight, foster ongoing innovation, and progressively embark on diversified operations. This approach aims to manifest the benefits of operational diversification, thus fostering improvements in banking performance.

Research on the Impact of Financial Technology on the Performance of Chinese Commercial Banks Taking the Retail Transformation of China Merchants Bank as an Example

In the era of big data, the integration of financial services and science and technology has become a trend, and financial technology has become critical to the financial service industry. This paper takes China Merchants Bank as a representative case study, summarizes the transformation process of China Merchants Bank business, and sorts out the aspects and transformation measures of China Merchants Bank's use of financial technology. By analyzing the case of China Merchants Bank introducing financial technology to realize the transformation, this paper uses the method of financial index analysis to study the impact of financial technology on the transformation of China Merchants Bank, obtains the impact of financial technology on commercial banks, and puts forward appropriate suggestions.The innovation of this paper is mainly reflected in the research methods and directions. According to the comprehensive literature, there are few cases of domestic and foreign scholars studying the combination of commercial banks and fintech. Therefore, this paper adopts the method of combining theory with practical cases, starting with the promotion of financial technology transformation by China Merchants Bank, discusses the impact of financial technology on the performance of China Merchants Bank, and then gives strategic suggestions for other commercial banks to use financial technology.

金融衍生工具对中国商业银行绩效的影响——来自中国上市商业银行的实证分析

金融衍生工具对中国商业银行绩效的影响——来自中国上市商业银行的实证分析

The Impact of Prudential Supervision on Financial Performance of Financial Industry: Take Commercial Banks as The Case Study

Prudential supervision is the inevitable choice for the sustainable and steady development of commercial banks. This paper uses panel data of 22 “A-share” listed commercial banks from 2014 to 2020 to measure total factor productivity to represent financial performance of commercial banks, and uses systematic generalized method of moments (GMM) estimation method to empirically investigate the impact of major prudential supervision tools on financial performance of Chinese commercial banks. The study finds that the total factor productivity of commercial banks has experienced a decline and then a rise. The capital adequacy ratio and leverage ratio in prudential supervision instruments significantly promote the financial performance of commercial banks, while liquidity ratio and loan provision ratio have significant negative effects on the financial performance of commercial banks.

Non-Parametric Model for Evaluating the Performance of Chinese Commercial Banks’ Product Innovation

A thorough analysis of commercial banks’ product innovation performance is essential to promoting bank product innovation capabilities and sustainable development. In this paper, the product innovation performance of commercial banks is defined as the conversion efficiency of input and output factors. The credit risk of product innovation of banks is considered as an undesirable output and incorporated in the performance evaluation system. Depending on whether there is a synchronous relationship between innovation income and risks, a Fixed Correlation model (FCM) and a Variable Correlation model (VCM) are then constructed based on Data Envelopment Analysis (DEA) method for the evaluation of commercial bank product innovation performance. In addition, an output optimization model of the objective function is also constructed to estimate the target income of commercial banks’ product innovation in the FCM and VCM. Finally, the proposed model is applied to Chinese listed commercial banks for estimating the performance and target income of product innovation.

Promotion Incentive, Employee Satisfaction and Commercial Bank Performance

Taking employee satisfaction as the mediating variable, this paper explored the relationship between promotion incentives, employee satisfaction and performance of Chinese commercial Banks by constructing a game model, and took 30 listed commercial banks from 2009 to 2018 as samples to empirically test the conclusions. Research shows that promotion incentive can significantly improve the performance of commercial Banks, and this incentive effect is more significant in state-owned commercial Banks. Further research shows that employee satisfaction plays a part in mediating between promotion incentive and performance of commercial Banks, that is, promotion incentive can improve performance of commercial Banks by improving employee satisfaction. The research conclusion enriches the research on the path of promotion incentive on the performance of commercial Banks and provides some inspirations for the design of incentive schemes for employees of commercial Banks.

Competitions in Different Banking Markets and Shadow Banking: Evidence from China

This study contributes to the empirical literature by being the first piece of research investigating the inter-relationships between competitions in different banking markets (deposit market, loan market and non-interest income market) and shadow banking using a sample of data from the Chinese banking industry over the period 2003-2013. In addition, the current study fills in the gap of the empirical literature by investigating the determinants of competition in different banking markets as well as the factors influencing the size of shadow banking in China. Competitions in different banking markets are measured by Boone indicator and a three-stage least square estimator is used to address the issue of endogeneity. The findings suggest that a larger volume of shadow banking leads to a decline in the level of competition in the Chinese deposit market, loan market and non-interest income market, while an increase in the level of competition in the loan market, deposit market and non-interest income market leads to an expansion of shadow banking industry in China. The findings provide important policy implications to the Chinese government and regulatory authorities to improve the performance of Chinese commercial banks.

The Relationship Between International Diversification and Business Performance of Chinese Commercial Banks

Chinese banking industry speeds up the process of internationalization as the global economy integrates and Chinese government accelerates the going out strategy. Many Chinese commercial banks explore overseas market by setting up new branches or merge and acquisition. Under the background, this paper uses empirical study to analyze the relationship between the degree of banks’ internationalization and business performance. Firstly, principal component analysis is applied to measure the degree of banks’ internationalization. Then, the paper constructs two models to analyze the panel data of five state-owned commercial banks, the second one with financial crisis as dummy variable. The results indicate that there is a U-shape relationship between the degree of banks’ internationalization and business performance in the first model without dummy variable. In the second model adding dummy variable, the financial crisis not only deteriorates Chinese commercial banks’ performance, but also makes the relationship between degree of internationalization and business performance become negative in 2008 while the degree of internationalization has positive influence on operational performance in years except for 2008.

The Impact of Credit Risk on the Financial Performance of Chinese Banks

The study aim was to empirically examine the impact of credit risk on the financial performance of Chinese banks. Secondary data was collected from five largest commercial banks in the country for the period of 7 years from 2008 to 2014. The study used nonperforming loans, capital adequacy ratio, impaired loan reserve, and loan impairment charges as measures of credit risk and for a measure of financial performance return on asset was used. Data analysis was done using a balanced panel data regression model, and the study findings reveal nonperforming loan and Capital adequacy have a significant impact of on financial performance of Chinese commercial banks; therefore, the need to control credit risk is crucial for bank financial performance.

Evaluating the performance of Chinese commercial banks: A comparative analysis of different types of banks

This paper examines the cost and profit efficiency of four types of Chinese commercial banks over the period from 2002 to 2013. We find that the cost and profit efficiencies improved across all types of Chinese domestic banks in general and the banks are more profit-efficient than cost efficient. Foreign banks are the most cost efficient but the least profit efficient. The profit efficiency gap between foreign banks and domestic banks has widened after the World Trade Organization transition period (2007–2013). Ownership structure, market competition, bank size, and listing status are the main determinants of the efficiency of Chinese banks. We also find a causal relationship between efficiency and SROE by using the panel auto regression method. The evidence from the shadow return on equity (SROE) suggests that policy makers should be cautious of the adjustment costs imposed by the recapitalization process, which offsets the efficiency gains.

The performance of Chinese commercial banks after accession to the WTO: from an efficiency perspective

This paper investigates the competitiveness of domestic commercial banking in China by evaluating the performance of Chinese commercial banks after China’s accession to the World Trade Organization. Based on a panel of 14 banks over the period 2002–2009, we measure the efficiency of Chinese commercial banking by using data envelopment analysis (DEA). Different from other studies, this work applies for four efficiency indicators, namely, social productive efficiency, service efficiency, profit efficiency, and growth efficiency, to investigate the competitive advantages of different banks. Our empirical results show that, compared with joint-stock banks, the levels of social productive efficiency, profit efficiency, and growth efficiency of four state-owned banks are very low while these banks exhibit higher levels of service efficiency. However, when we change our measure of labor input from the number of employees to employee salary, the efficiency of state-owned banks becomes higher than that of the joint-stock banks. In addition, our results also show, among other findings, that corporation structure affects efficiency. However, the specific relationship of state-owned stock and efficiency is not always negative, and a positive relationship between foreign shares and efficiency only holds for product efficiency.

Evaluating the Performance of Chinese Commercial Banks: A Comparative Analysis of Different Types of Banks

This paper examines the cost and profit efficiency of four types of Chinese commercial banks over the period from 2002 to 2013. We find that the cost and profit efficiencies improved across all types of Chinese domestic banks in general and the banks are more profit-efficient than cost efficient. Foreign banks are the most cost efficient but the least profit efficient. The profit efficiency gap between foreign banks and domestic banks has widened after the World Trade Organization transition period (2007-2013). Ownership structure, market competition, bank size, and listing status are the main determinants of the efficiency of Chinese banks. We also find a causal relationship between efficiency and SROE by using the panel auto regression method. The evidence from the shadow return on equity (SROE) suggests that policy makers should be cautious of the adjustment costs imposed by the recapitalization process, which offsets the efficiency gains.

Comparative Performance of Chinese Commercial Banks: Analysis, Findings and Policy Implications

This paper investigates the financial performance of Chinesebanks by using financial ratio analysis. The analysis shows that the lowprofitability of state-owned commercial banks results from their higherratio for non-interest expenses and lower interest margin thanjoint-equity banks. The much lower profit margin in state-owned banksdraws down their levels of ROE and ROA, even with the offsetting effectsof more efficient utilization of their assets and higher financialleverage. Although data limitations prevent us from studying the riskprofiles of the banks in detail, it is clear that these Chinese banksgenerated lower returns with higher financial risks than their Westerncounterparts. The paper concludes with a discussion of major issuesaffecting Chinese bank performance. Significant difficulties encounteredin assessing bank performance are also identified anddiscussed.