The Impacts of Competition and Risk on Profitability in Chinese Banking: Evidence from Boone Indicator and Stability Inefficiency

Yong Tan ()
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Yong Tan: Department of Accountancy, Finance and Economics, Huddersfield Business School, University of Huddersfield

Annals of Economics and Finance, 2018, vol. 19, issue 2, 523-554

Abstract: This paper tests the competition in different banking markets (deposit market, loan market, and non-interest income market) using a sample of Chinese commercial banks between 2003-2013 and further examines the impact of competition on bank profitability while controlling for different types of risk. The results show that the non-interest income market has a higher level of competition compared to the other two markets during early years of the examined period. The findings further report that in a higher competitive deposit market, Chinese commercial banks have lower levels of profitability. Finally, it is suggested that bank profitability is significantly affected by liquidity risk.

Keywords: Bank profitability; Bank competition; GMM; China (search for similar items in EconPapers)
JEL-codes: C23 G21 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (7)

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