Marketization Level, Fiscal Input, and Rural Commercial Bank Performance

Wenli Wang, Qian Sun and Mingbo Zheng

Emerging Markets Finance and Trade, 2021, vol. 57, issue 14, 4105-4120

Abstract: Based on the financial deepening theory and the imperfect competition market theory, this article analyzes the influence of marketization level on rural commercial bank’s financial performance as well as social performance by adopting the data of 36 rural commercial banks in China during the period 2012–2016 and further discusses the role of fiscal input in this relationship. We utilize a panel threshold model to examine the nonlinear influence. The empirical results show that the impact of marketization level on financial performance of rural commercial banks is nonlinear. Marketization exerts a greater positive impact on financial performance of rural commercial banks when marketization is low. In addition, marketization exerts an underlying effect on rural commercial bank’s social performance when the threshold of marketization is exceeded. Finally, fiscal input of the government plays an inhibitory role in this promotion relationship. Overall, we confirm that marketization plays a crucial role in rural commercial bank’s performance.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:57:y:2021:i:14:p:4105-4120

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DOI: 10.1080/1540496X.2020.1803825

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