Local Financing Platform Loan and Performance of City Commercial Banks: Evidence from City Commercial Banks in China

Wei Kong (), Wenxiu Hu, Kaicheng Liao and Xiaoqiang Ma
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Wei Kong: Xi'an University of Technology
Wenxiu Hu: Xi'an University of Technology
Kaicheng Liao: Tongji University
Xiaoqiang Ma: Northwestern University

Hacienda Pública Española / Review of Public Economics, 2021, vol. 238, issue 3, 81-99

Abstract: This paper investigates the relationship between optimum local financing platform loan and the perfor¬mance of CCBs using data of 68 CCBs during 2010 to 2018. Our results derived from panel threshold regression model show a positive and significant impact of local financing platform loan on the perfor¬mance of CCBs before the upper estimated thresholds. Once the local financing platform loan moves above the upper threshold level, then its impact becomes negative. Further, the same relationship is conducted in sub-samples of eastern, central and western regions. Our findings suggest the policymak¬ers that maintains ideal local financing platform loan is effective to encourage the performance of CCBs.

Keywords: Local financing platforms; Loan; Performance; CCBs (search for similar items in EconPapers)
JEL-codes: G21 H21 (search for similar items in EconPapers)
Date: 2021
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