Thursday, September 06, 2007
I typically avoid self congratulations, but someone was telling me that an article coauthored by me and my colleagues Liu Mingxing at PKU and Zhang Qi at Northwestern is now the most downloaded paper on China Economic Review. Some of you may be interested in the paper. The paper is pretty atheoretical, but it's the first paper with some rigorous measurements of bank performance in different regions. Probably a lot of non-academics were downloading it.....
Comparing the performance of Chinese banks: A principal component approachstar, open
Victor SHIH, Corresponding Author Contact Information, Qi ZHANG and Mingxing LIU
Department of Political Science, Northwestern University, United States
The School of Government, Beijing University 03/2006, China
Available online 28 December 2006.
Abstract
Using previously unavailable central bank data, this paper first uses principal component analysis to derive four measures of a bank's ability to perform the core task of financial intermediation. This study then compares the performance of China's state banks, joint-stock banks, and city commercial banks along these measures. In terms of overall performance and in credit risk management, joint-stock banks perform significantly better than both the state banks and the city commercial banks. In China, unlike in other developing countries, the size of the bank is not correlated with their performance. Mid-size national joint-stock banks perform considerably better than the Big Four banks and smaller city commercial banks (CCBs). We further conduct regional and jurisdictional analysis of the CCBs, which indicates that a mix of geographical and historical legacies drives the substantial variation in CCB performance.
Comparing the performance of Chinese banks: A principal component approachstar, open
Victor SHIH, Corresponding Author Contact Information, Qi ZHANG and Mingxing LIU
Department of Political Science, Northwestern University, United States
The School of Government, Beijing University 03/2006, China
Available online 28 December 2006.
Abstract
Using previously unavailable central bank data, this paper first uses principal component analysis to derive four measures of a bank's ability to perform the core task of financial intermediation. This study then compares the performance of China's state banks, joint-stock banks, and city commercial banks along these measures. In terms of overall performance and in credit risk management, joint-stock banks perform significantly better than both the state banks and the city commercial banks. In China, unlike in other developing countries, the size of the bank is not correlated with their performance. Mid-size national joint-stock banks perform considerably better than the Big Four banks and smaller city commercial banks (CCBs). We further conduct regional and jurisdictional analysis of the CCBs, which indicates that a mix of geographical and historical legacies drives the substantial variation in CCB performance.
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