WTO challenges and efficiency of Chinese Banks

Article


Jiang, C., Yao, S., Feng, G. and Willenbockel, D. 2005. WTO challenges and efficiency of Chinese Banks. Applied Economics. 39 (5), pp. 629-643. https://doi.org/10.1080/00036840500447799
TypeArticle
TitleWTO challenges and efficiency of Chinese Banks
AuthorsJiang, C., Yao, S., Feng, G. and Willenbockel, D.
Abstract

After joining the World Trade Organisation (WTO) in December 2001, China was given 5 years to completely open up its banking market for international competition. Chinese banks have been renowned for their mounting nonperforming loans and low efficiency. Despite gradual reforms, the banking system is still dominated by state ownership and encapsulated monopolistic control. How to raise efficiency is a key to the survival and success of domestic banks, especially the state-owned commercial banks. Two important factors may be responsible for raising efficiency: ownership reform and hard budget constraints. This article uses a panel data of 22 banks over the period 1995 to 2001, and employs a stochastic frontier production function to investigate the effects of ownership structure and hard budget constraint on efficiency. Empirical results suggest that nonstate banks were 8-18% more efficient than state banks, and that banks facing a harder budget tend to perform better than those heavily capitalized by the state or regional governments. The results shed important light on banking sector reform in China to face the tough challenges after WTO accession.

JournalApplied Economics
ISSN0003-6846
Publication dates
Print01 Feb 2005
Publication process dates
Deposited04 Dec 2008
Output statusPublished
Digital Object Identifier (DOI)https://doi.org/10.1080/00036840500447799
LanguageEnglish
Permalink -

https://repository.mdx.ac.uk/item/80z59

  • 25
    total views
  • 0
    total downloads
  • 0
    views this month
  • 0
    downloads this month

Export as