China’s anti-corruption campaign and bank loan loss provisions: Evidence from a quasi-natural experiment

Yunqing Tao

Economics Letters, 2020, vol. 196, issue C

Abstract: This paper employs a difference-in-differences estimation to investigate the causal effects of the anti-corruption campaign on bank loan loss provisions in China. I find that the anti-corruption campaign has significantly reduced bank loan loss provisions. My finding are particularly pronounced in joint-stock commercial and city commercial banks. I analyze the mechanism from the perspective of bank risk management, and find that banks with less non-performing loans and more risk reserves have less provision for loan losses in the anti-corruption campaign, indicating that risk prevention motivation is its main purpose.

Keywords: Anti-corruption campaign; Bank loan loss provisions; Risk prevention motivation; Difference-in-differences (search for similar items in EconPapers)
JEL-codes: D73 G21 G28 P2 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:196:y:2020:i:c:s0165176520303098

DOI: 10.1016/j.econlet.2020.109505

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