Does financial regulation affect the profit efficiency and risk of banks? Evidence from China's commercial banks

Tung-Hao Lee and Shu-Hwa Chih

The North American Journal of Economics and Finance, 2013, vol. 26, issue C, 705-724

Abstract: The goal of financial regulation is to enable banks to improve liquidity and solvency. Stricter regulation may be good for bank stability, but not for bank efficiency. This research aims to examine whether banks have met the CBRC's standard of financial regulations and explores how the previously implemented financial regulations have affected bank efficiency and risk in the past. In addition, we also explored the trade-off relationship between efficiency and risk. Unlike other studies, this study used bank assets as a classification standard from the financial risk and differential regulatory perspective.

Keywords: Financial regulation; Profit efficiency; Z-score; Large and small banks (search for similar items in EconPapers)
JEL-codes: G21 G33 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (38)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:26:y:2013:i:c:p:705-724

DOI: 10.1016/j.najef.2013.05.005

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