Impact of shadow banking on Chinese banks’ efficiency: The moderating effect of ownership

Jing Chen, Fakarudin Kamarudin, Bany Ariffin Amin Noordin, Lau Wei Theng and Tim Zhou

Finance Research Letters, 2025, vol. 83, issue C

Abstract: This study examines the effect of shadow banking on the efficiency of Chinese banks and how ownership status moderates the relationship. It measures the technical efficiency score of a sample consisting of 160 Chinese commercial banks from 2011 to 2022 using data envelopment analysis via an intermediary approach. Using the ordinary least squares, feasible generalized least squares, and panel-corrected standard error estimation methods, the findings demonstrate that shadow banking significantly and positively affects bank efficiency for all banks in the sample. Furthermore, while foreign ownership strengthens this relationship, the inverse is true for joint-stock and city commercial banks. However, state-owned banks and rural commercial banks show insignificant moderating effects.

Keywords: Shadow banking; Technical efficiency; Bank ownership; Moderating effect (search for similar items in EconPapers)
JEL-codes: G21 G23 G28 G32 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:83:y:2025:i:c:s1544612325009419

DOI: 10.1016/j.frl.2025.107682

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