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Bank profitability and GDP growth in China: A Note

Tan, Aaron Yong and Floros, Christos (2012) Bank profitability and GDP growth in China: A Note. Journal of Chinese Economics and Business Studies, 10 (3). pp. 267-273. ISSN 1476-5284

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This article examines the effect of GDP growth on bank profitability in China over the period 2003-2009. 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. Furthermore, the results show that (1) the profitability in Chinese banking industry is significantly affected by the level of non-performing loans, and (2) Chinese banks with higher level of capital have lower profitability. Finally, we find that the departure from a perfect competitive market structure in Chinese banking industry is relatively small.

Item Type: Article
Subjects: H Social Sciences > HG Finance
Schools: Huddersfield Business School
Huddersfield Business School > Quantitative Analysis Research Group
Depositing User: Yong (Aaron) Tan
Date Deposited: 18 Apr 2013 12:29
Last Modified: 28 Aug 2021 20:03


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