2012
DOI: 10.1080/14765284.2012.703541
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Abstract: This article examines the effect of GDP growth on bank profitability in China over the period [2003][2004][2005][2006][2007][2008][2009]. The one-step system GMM estimator is used to test the persistence of profitability in Chinese banking industry. The empirical findings suggest that cost efficiency is positively related to bank profitability, while lower profitability can also be explained by higher taxes paid by banks. In addition, there is a negative relationship between GDP growth and bank profitability. … Show more

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Cited by 105 publications
(110 citation statements)
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“…The financial development variable has mixed results, positive in model 5 and negative in model 6 but insignificant in both, however, only in model 7 is positive and significant which indicate that the demand for banking products and services increases in the economies that have well-developed banking sectors, so banks can increase their profitability with effective strategies. This result is in line with Tan and Floros (2012). However, it is in contrast with Coccorese and Girardone (2017) who find a negative and significant impact of financial development variable on bank profitability because operation in such highly competitive and crowded environment can cause a negative impact on the banks' margins and so the profit.…”
Section: Resultssupporting
confidence: 81%
“…The financial development variable has mixed results, positive in model 5 and negative in model 6 but insignificant in both, however, only in model 7 is positive and significant which indicate that the demand for banking products and services increases in the economies that have well-developed banking sectors, so banks can increase their profitability with effective strategies. This result is in line with Tan and Floros (2012). However, it is in contrast with Coccorese and Girardone (2017) who find a negative and significant impact of financial development variable on bank profitability because operation in such highly competitive and crowded environment can cause a negative impact on the banks' margins and so the profit.…”
Section: Resultssupporting
confidence: 81%
“…They find that liquidity risk is the endogenous determinant of bank performance and the causes of liquidity risk include components of liquid assets and dependence on external funding, supervisory and regulatory factors and macroeconomic factors. Tan and Floros (2012) infer that liquidity position improve bank's profitability in China. Fadzlan and Khazanah (2009) examine the determinants of profitability of China banking and suggest that liquidity has negative effects on profit.…”
Section: Literature Reviewmentioning
confidence: 97%
“…When the need for credit increases, the bank will benefit from credit interest. Different results were found by Tan and Floros (2012) who found that the GDP growth rate decreases the level of ROA. With the increasing demand for credit, banks are increasingly aggressive in offering lower interest rates, thereby creating competition between one bank with another bank.…”
Section: Gdp Growth Ratementioning
confidence: 67%