Tan, Aaron Yong and Floros, Christos (2013) Risk, capital and efficiency in Chinese Banking. Journal of International Financial Markets, Institutions and Money, 26. pp. 378-393. ISSN 1042-4431

We assess the relationship between bank efficiency, risk and capital for a sample of Chinese commercial banks employing three efficiency indexes and four risk indicators under a three stage least square method in a panel data framework. The empirical evidence suggests that there is a positive and significant relationship between risk (loan-loss provision as a fraction to total loans or LLPTL) and efficiency in Chinese banking industry, while the relationship between risk (Z-score) and level of capitalization is negative and significant.

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