Use this URL to cite or link to this record in EThOS: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.587925
Title: Market competition, efficiency and profitability : an empirical study on the Chinese banking industry 1997-2006
Author: Yang, WeiWei
Awarding Body: Loughborough University
Current Institution: Loughborough University
Date of Award: 2012
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Abstract:
Since the economic reform was initiated in 1978, the Chinese banking sector has undergone significant changes, particularly during the period under our investigation. This is primarily induced by the WTO entry in 2001, which brought in to full openness the financial market in China. The ultimate objective of the recent banking reform is to promote competition and efficiency as a way of improving the overall competitiveness and banking performance, in order to cope with challenges from foreign competitors. With the purpose of examining whether the recent banking reform is effective in achieving the targets as well as suggesting future policy directions, this study investigates market competition, cost efficiency and profitability in the Chinese banking industry over those critical years (1997-2006) before and after the WTO entry. We first employ both structural (the SCP) and non-structural (the Panzar-Rosse) approach to evaluate market competition. Then we estimate cost efficiency for Chinese banks under the Stochastic Frontier Approach (SFA). Finally, we assess the relationship between profitability and market structure under the structure-performance hypothesis and the efficient-structure hypothesis. Our findings show that Chinese banking market become less concentrated and more competitive since the WTO entry. Chinese banks improve their cost efficiencies, with state-owned banks are the least efficient while joint equity banks are the most efficient. The explanation for the relationship between profitability and market structure is quite mixed. The acceptance of which hypothesis depends on which dependent variable is used.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID: uk.bl.ethos.587925  DOI: Not available
Keywords: Market structure ; Competition ; Stochastic Frontier Approach ; Cost efficiency ; Bank performance ; Shadow return on equity ; Chinese banking reform
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