Risk, profitability, and competition: evidence from the Chinese banking industry

Yong Tan () and Christos Floros

Journal of Developing Areas, 2014, vol. 48, issue 3, 303-319

Abstract: This paper investigates the inter-temporal relationship between banking profitability, competition and risk of a sample of Chinese commercial banks by employing several profitability and risk indicators and using Seemingly Unrelated Regression (SUR) under a panel data framework over 2003-2009. The results support the Structure-Conduct-Performance (SCP) theory which states that there is a negative impact of competition on bank profitability. We also find that banks with higher profitability normally operate in a less competitive environment. The results have potentially important implications for the government and banking regulatory authorities to make relevant policies.

Keywords: Banking Profitability; Competition; Risk; SUR; China (search for similar items in EconPapers)
JEL-codes: C23 C50 G21 G32 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:jda:journl:vol.48:year:2014:issue3:pp:303-319

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