Market structure, risk taking, and the efficiency of Chinese commercial banks

Xiaohui Hou, Qing Wang and Qi Zhang

Emerging Markets Review, 2014, vol. 20, issue C, 75-88

Abstract: We investigate the impacts of market structure and bank risk taking on the efficiency of Chinese commercial banks, employing a two-stage semi-parametric data envelopment analysis model. Our empirical results show that the intense market competition compels Chinese commercial banks to develop advanced technical experience and skills, thus improving their technical efficiency. Besides, the technical efficiency is positive associated with the risk taking. Since more risk taking implies a credit expansion of Chinese commercial banks based on the soft risk constraint, the improvement of technical efficiency may accompany an accumulation of banking risks in the current financial system of China.

Keywords: Market structure; Bank risk taking; Technical efficiency; Chinese commercial banks (search for similar items in EconPapers)
JEL-codes: C14 G21 G28 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (33)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:20:y:2014:i:c:p:75-88

DOI: 10.1016/j.ememar.2014.06.001

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