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Bank profitability and inflation: the case of China

Tan, Aaron Yong and Floros, Christos (2012) Bank profitability and inflation: the case of China. Journal of Economic Studies, 39 (6). pp. 675-696. ISSN 0144-3585

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This study examines the determinants of bank profitability in China over the period 2003-2009. The determinants are divided into three groups: bank-specific, industry-specific and macroeconomic variables. The two-step General Method of Moments (GMM) system estimator is used. The results show that there is a positive relationship between bank profitability, cost efficiency, banking sector development, stock market development and inflation. We report that low profitability can be explained by higher volume of non-traditional activity and higher taxation. Moreover, we confirm that there is a competitive environment in Chinese banking industry. Furthermore, we propose policy actions that should be taken to improve bank profitability in China.

Item Type: Article
Subjects: H Social Sciences > HG Finance
Schools: The Business School
The Business School > Quantitative Analysis Research Group
Depositing User: Aaron Tan
Date Deposited: 18 Apr 2013 12:46
Last Modified: 05 Nov 2015 00:23


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