X-efficiency versus Rent Seeking in Chinese banks: 1997-2006

Kent Gerard Matthews (), Jianguang Guo and Xu Zhang

No E2008/26, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: This study demarcates cost-inefficiency in Chinese banks into X-inefficiency and rent-seeking-inefficiency. A protected banking market not only encourages weak management and X-inefficiency but also public ownership and state directed lending encourages moral hazard and bureaucratic rent seeking. This paper uses bootstrap non-parametric techniques to estimate measures of X-inefficiency and rent-seeking inefficiency for the 4 state owned banks and 10 joint-stock banks over the period 1997-2006. The paper adjusts for the quality of loans by treating NPLs as a negative output. The paper shows that Chinese banks have reduced cost inefficiency and reduced X-inefficiency at a faster rate than rent-seeking inefficiency.

Keywords: Bank Efficiency; China; X-inefficiency; DEA; Bootstrapping (search for similar items in EconPapers)
JEL-codes: D23 G21 G28 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-cna, nep-eff and nep-tra
Date: 2008-11
View list of references

Downloads: (external link)
http://www.cardiff.ac.uk/carbs/econ/workingpapers/papers/E2008_26.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:cdf:wpaper:2008/26

Access Statistics for this paper

More papers in Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section
Contact information at EDIRC.
Series data maintained by Bruce Webb ().