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Risk, competition and cost efficiency in the Chinese banking industry

Tan, Aaron Yong and Floros, Christos (2017) Risk, competition and cost efficiency in the Chinese banking industry. International Journal of Banking, Accounting and Finance. ISSN 1755-3830 (In Press)

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Abstract

Using a sample of Chinese commercial banks over the period 2003-2013, this paper tests the interrelationships between credit risk, competition and cost efficiency in the Chinese banking industry under a three-stage least square estimator. The findings suggest that a higher level of competition leads to higher credit risk of Chinese commercial banks and a higher level of efficiency leads to lower credit risk. In addition, it is found that higher level of efficiency results in higher level of competition in the Chinese banking industry and higher levels of credit risk precede an increase in the level of competition. Finally, the results show that Chinese commercial banks with higher levels of credit risk have lower levels of cost efficiency and competition-efficiency hypothesis holds in the Chinese banking industry. The results provide policy implications to the Chinese government and banking regulatory authorities.

Item Type: Article
Uncontrolled Keywords: Credit risk; Competition; Cost efficiency; Chinese banking; Three-stage least square
Subjects: H Social Sciences > HG Finance
Schools: Huddersfield Business School
Related URLs:
Depositing User: Aaron Tan
Date Deposited: 28 Sep 2017 14:51
Last Modified: 28 Sep 2017 14:58
URI: http://eprints.hud.ac.uk/id/eprint/33534

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