WTO challenges and efficiency of Chinese Banks
Full text is not in this repository.
This item is available in the Library Catalogue
After joining the World Trade Organisation (WTO) in December 2001, China was given 5 years to completely open up its banking market for international competition. Chinese banks have been renowned for their mounting nonperforming loans and low efficiency. Despite gradual reforms, the banking system is still dominated by state ownership and encapsulated monopolistic control. How to raise efficiency is a key to the survival and success of domestic banks, especially the state-owned commercial banks. Two important factors may be responsible for raising efficiency: ownership reform and hard budget constraints. This article uses a panel data of 22 banks over the period 1995 to 2001, and employs a stochastic frontier production function to investigate the effects of ownership structure and hard budget constraint on efficiency. Empirical results suggest that nonstate banks were 8-18% more efficient than state banks, and that banks facing a harder budget tend to perform better than those heavily capitalized by the state or regional governments. The results shed important light on banking sector reform in China to face the tough challenges after WTO accession.
|Research Areas:||A. Middlesex University Schools and Centres > Business School > Economics|
|Citations on ISI Web of Science:||12|
|Deposited On:||04 Dec 2008 12:44|
|Last Modified:||28 Oct 2014 17:20|
Repository staff only: item control page
Full text downloads (NB count will be zero if no full text documents are attached to the record)
Downloads per month over the past year