Bank ownership and efficiency in China: What will happen in the world's largest nation?

Allen N. Berger, Iftekhar Hasan and Mingming Zhou ()

Journal of Banking & Finance, 2009, vol. 33, issue 1, 113-130

Abstract: China is reforming its banking system, partially privatizing and taking on minority foreign ownership of three of its dominant "Big Four" state-owned banks. This paper helps predict the effects by analyzing the efficiency of Chinese banks over 1994-2003. Findings suggest that Big Four banks are by far the least efficient; foreign banks are most efficient; and minority foreign ownership is associated with significantly improved efficiency. We present corroborating robustness checks and offer several credible mechanisms through which minority foreign owners may increase Chinese bank efficiency. These findings suggest that minority foreign ownership of the Big Four will likely improve performance significantly.

Keywords: China; Banks; Efficiency; Foreign; ownership (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (426)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:33:y:2009:i:1:p:113-130

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