Do different forms of government ownership matter for bank capital behavior? Evidence from China

Jiang, Chunxia and Liu, Hong and Molyneux, Philip (2019) Do different forms of government ownership matter for bank capital behavior? Evidence from China. Journal of Financial Stability, 40 . pp. 38-49. ISSN 1572-3089

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Abstract

This study attempts to reconcile the conflicting theoretical predictions regarding how government ownership affects bank capital behaviour. Using a unique Chinese bank dataset over 2006-2015 we find that government-owned banks have higher target capital ratios and adjust these ratios faster compared to private banks, supporting the ‘development/political’ view of the government’s role in banking. This effect is stronger for local government-owned and state enterprise-owned banks than for central government-owned banks. We also find that undercapitalized government-owned banks increase equity while undercapitalized foreign banks contract assets and liabilities as their respective main strategy to adjust their capital ratios.

Item Type: Article
Research Areas: A. > Business School
Item ID: 25767
Useful Links:
Depositing User: Chunxia Jiang
Date Deposited: 10 Dec 2018 14:15
Last Modified: 08 Jan 2019 16:46
URI: http://eprints.mdx.ac.uk/id/eprint/25767

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