What explains the low profitability of Chinese banks?

Abstract

a b s t r a c tThis paper analyzes empirically what explains the low profitability of Chinese banks for the period 1997-2004. We find that better capitalized banks tend to be more profitable. The same is true for banks with a relatively larger share of deposits and for more X-efficient banks. In addition, a less concentrated banking system increases bank profitability, which basically reflects that the four state-owned commercial banksChina's largest banks -have been the main drag for system's profitability. We find the same negative influence for China's development banks (so-called Policy Banks), which are fully state-owned. Instead, more market-oriented banks, such as joint-stock commercial banks, tend to be more profitable, which again points to the influence of government intervention in explaining bank performance in China. These findings should not come as a surprise for a banking system which has long been functioning as a mechanism for transferring huge savings to meet public policy goals.

Diversification, bank performance and risk: have Tunisian banks adopted the new business model?

“…Also, banks with higher capital ratios tend to face lower costs of funding due to lower prospective bankruptcy costs. Our results confirm the work of Abreu and Mendes (2002), Goddard et al (2004), Ben Naceur and Goaied (2008 and García-Herrero et al (2009).…”

Liquidity Risk and Bank Performance: An Empirical Test for Tunisian Banks

“…The main results indicate that, besides the negative effect of credit risk, liquidity risk deceases also the performance of Iranian banks. Based on 22 Pakistani banks observed over the period 2004-2009, Arif and al. (2012 aimed to empirically analyze the impact of liquidity risk on bank performance.…”

“…However, there were only few studies that investigated the relationship between liquidity risk and bank performance (Claeys and Vander Vennet, 2008;Garcí a-Herrero andal., 2009, Trujillo-Ponce, 2013). In our best knowledge, there were few papers that studied this relation for the Tunisian context.…”

Bank Profitability and Macroeconomy: Evidence From Lithuania

“…Cross-country panel data sets have been investigated by Molyneux and Thornton (1992), Demirguc-Kunt and Huizinga (1999), Abreu and Mendes (2002), Goddard et al (2004), Pasiouras and Kosmidou (2007), Albertazzi andGambacorta (2009), Goddard et al (2010), Lee and Hsieh (2013), Shehzad et al (2013), Gambacorta et al (2014), Dietrich and Wanzenried (2014). Examples of single countries' analysis are studies of Andersen et al (2008), Athanasoglou et al (2008), Apergis (2009), García-Herrero et al (2009), Coffinet and Lin (2010, Wanzenried (2011), Sufian (2011), Kanas et al (2012), Rumler and Waschiczek (2012), Trujillo-Ponce (2013), Berlemann et al (2014), Perman et al (2015), Chronopoulos et al (2015). Certainly, the empirical results of the above mentioned studies vary as time periods, data sets, examined environments and countries differ.…”