Risk, capital and efficiency in Chinese banking

Tan, Yong; Floros, Christos

doi:10.1016/j.intfin.2013.07.009

Cited by 193 publications

(223 citation statements)

References 38 publications

(41 reference statements)

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“…Miller and Noulas (1997) notice that an increase in credit risk leads to an improvement in profit margin, leading subsequently to an enhancement of efficiency (Johnes et al, 2013). Among the studies that corroborate a positive relationship between efficiency and risk we mention those of Altunbas et al (2007), Yener et al (2007), Yong and Christos (2013) and Saeed and Izzeldin (2014). However, Kwan and Eisenbeis (1997) point to a positive relationship between inefficiency and risk taking.…”

Section: Literature Reviewmentioning

confidence: 97%

“…In this regard, several empirical evidences proved the existence of a positive relationship between efficiency and size in the banking industry (Bhattacharryya et al, 1997), Miller and Noulas (1996), Jackson and Fethi (2000 ), Chen et al (2005), Abdul Majid et al (2005), Drake et al (2003) and Yong and Christos (2013). However, Deelchand and Padgett (2009) show that large banks hold less capital, take more risks and are less efficient.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The results of this modelling show that inefficient banks operate with more capital while maintaining a high level of risk. Yong and Christos (2013) assessed the relationship between risk, capital and efficiency on a sample of 101 Chinese commercial banks between 2003 and 2009. The authors found that banks with higher liquidity levels present lower pure and technical efficiencies and higher capitalization.…”

Section: Literature Reviewmentioning

confidence: 99%

“…These hypotheses represent the relationship between cost and revenue efficiency and risk, capital, size, and market structure. Gorton and Rosen (1995), Hughes et al (1994), Miller and Noulas (1997), Altunbas et al (2007), Yener et al (2007), Yong and Christos (2013), Johnes et al (2013), Saeed and Izzeldin (2014).…”

Section: The Hypothesesmentioning

confidence: 99%

“…Capital and efficiency - Altunbas et al (2007), Yener et al (2007), Deelchand andPadgett (2009) Yong andChristos (2013).…”

Section: H2mentioning

confidence: 99%

See 4 more Smart Citations

A Study of the Determinants of Cost and Revenue Efficiency in the Context of Islamic and Conventional Banks: The Case of Malaysia from 2006 to 2012

Ghroubi¹,

Abaoub²

2016

IJEF

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In this paper, we examine the determinants of cost and revenue efficiency of Malaysian banks over the period [2006][2007][2008][2009][2010][2011][2012]. Three steps are undertaken to study a sample of 17 Islamic banks (IBs) and 20 conventional banks (CBs). In the first step, we assessed the competitiveness of the Malaysian banking sector. After solving the multicollinearity problem, as a second step, we selected three sets of independent variables: bank-specific, industry-specific and macroeconomic variables. In the last step, we estimated the efficiency models with the Feasible Generalized Least Squares (FGLS) method. The obtained results highlighted the importance of regulatory capital and size. As for the effect of competitiveness, it is found to be statistically significant only for revenue efficiency. These results may be useful to political decision-makers and regulatory authorities.

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Section: Literature Reviewmentioning

confidence: 97%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: The Hypothesesmentioning

confidence: 99%

“…Capital and efficiency - Altunbas et al (2007), Yener et al (2007), Deelchand andPadgett (2009) Yong andChristos (2013).…”

Section: H2mentioning

confidence: 99%

See 3 more Smart Citations

A Study of the Determinants of Cost and Revenue Efficiency in the Context of Islamic and Conventional Banks: The Case of Malaysia from 2006 to 2012

Ghroubi¹,

Abaoub²

2016

IJEF

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Financial innovation and economic growth: Empirical evidence from China, India and Pakistan

2020

Self Cite

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This study investigates the causal relationship between financial innovation and economic growth in China, India, and Pakistan over the period of 1970-2016. Using an Autoregressive Distributed Lag (ARDL) bound testing and Granger causality-based Error Correction Model (ECM), this study finds that financial innovation generally has a positive and statistically significant impact on economic growth in the short-run and long-run. These results show that in the long-run, monetary management and credit flow to the private sector play an essential role in economic growth. The trade openness and gross capital formation contribute considerably to the economic growth in China, India, and Pakistan. For robustness, this study also applies the Dynamic Ordinary Least Square (DOLS) and Fully Modified Ordinary Least Square (FMOLS) method. The findings of this study suggest that the financial sector plays an essential role in supporting innovation activity in Asian countries.

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Deconstructing three‐stage overall efficiency into input, output and stability efficiency components with consideration of market power and loan loss provision: An application to Chinese banks

Fukuyama

Tan

2020

Int. J Fin Econ

Self Cite

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The current study proposes a new three-stage network data envelopment analysis (DEA) model to estimate three different types of efficiencies. More specifically, the input efficiency is estimated in the first stage, followed by the evaluation of stability efficiency in the second stage, and finally, the output efficiency is derived from the final stage. In particular, we consider market power in deposits and market power in loans in the banking production process. Rather than using non-performing loans as an undesirable output, this paper innovatively uses loan loss provisions in bank production. We argue that the loan loss provisions are helpful to improve bank stability because they provide a cushion to absorb unexpected losses, therefore we treat it as a good intermediate output in the second stage and a good intermediate input in the third stage. The results exhibit that the scores of stability inefficiency are the highest, followed by output inefficiency, while Chinese commercial banks have the lowest level of input inefficiency. Not only did we observe that the Chinese banking industry has the highest level of stability inefficiency, but we also noticed that the stability inefficiency had the strongest volatility during 2007-2017. We also explore the impact of non-performing loan ratios from three different geographical areas on bank efficiency in China in a secondphase regression analysis, the results of which show that the input inefficiency results from higher levels of financial risk from the central area in China, while the western area in China has the opposite sign.

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Risk, capital and efficiency in Chinese banking

Cited by 193 publications

References 38 publications

A Study of the Determinants of Cost and Revenue Efficiency in the Context of Islamic and Conventional Banks: The Case of Malaysia from 2006 to 2012

A Study of the Determinants of Cost and Revenue Efficiency in the Context of Islamic and Conventional Banks: The Case of Malaysia from 2006 to 2012

Financial innovation and economic growth: Empirical evidence from China, India and Pakistan

Deconstructing three‐stage overall efficiency into input, output and stability efficiency components with consideration of market power and loan loss provision: An application to Chinese banks

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