Serie: Documentos de Trabajo. 0910.
Autor: Alicia García-Herrero, Sergio Gavilá y Daniel Santabárbara.
Temas: Comité de Basilea | Crecimiento económico y convergencia | Central de Balances | Crédito | Legislación.
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Resumen
This paper analyzes empirically what explains the low profitability of Chinese banks for the period 1997-2004. We find that better capitalized banks tend to be more profitable. The same is true for banks with a relatively larger share of deposits and for more X-efficient banks. In addition, a less concentrated banking system increases bank profitability, which basically reflects that the four state-owned commercial banks -China's largest banks- have been the main drag for system's profitability. We find the same negative influence for China's development banks (so called Policy Banks), which are fully state-owned. Instead, more market oriented banks, such as joint-stock commercial banks, tend to be more profitable, which again points to the influence of government intervention in explaining bank performance in China. These findings should not come as a surprise for a banking system which has long been functioning as a mechanism for transferring huge savings to meet public policy goals.