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The impacts of risk-taking behaviour and competition on technical efficiency: evidence from the Chinese banking industry

Tan, Aaron Yong and Anchor, J.R (2017) The impacts of risk-taking behaviour and competition on technical efficiency: evidence from the Chinese banking industry. Research in International Business and Finance. ISSN 0275-5319

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Abstract

This paper tests the impact of risk and competition on efficiency in the Chinese banking industry over the period 2003-2013. Comprehensive types of risk-taking behaviour are considered including credit risk, liquidity risk, capital risk, and insolvency risk. Competition is measured by the Lerner index. The results are cross-checked using an alternative econometric technique as well as an alternative competition indicator. The findings show that the technical and pure technical efficiencies of Chinese commercial banks are significantly and negatively affected by liquidity risk. They further show that greater competition precedes declines in technical and pure technical efficiencies of Chinese commercial banks. The results suggest that
Chinese bank efficiency is significantly affected by bank diversification, banking sector development, stock market development, inflation and GDP growth rate. The findings also indicate that, compared to state-owned commercial banks, joint-stock commercial banks and city commercial banks have lower technical and pure technical efficiencies.

Item Type: Article
Subjects: H Social Sciences > HG Finance
Schools: Huddersfield Business School
Related URLs:
Depositing User: Aaron Tan
Date Deposited: 20 Apr 2017 14:57
Last Modified: 20 Apr 2017 18:30
URI: http://eprints.hud.ac.uk/id/eprint/31759

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