The impact of diversification on the profitability and risk of Chinese banks: evidence from a semiparametric approach

Minzhi Wu (), Emili Tortosa-Ausina and Paula Cruz-García ()
Additional contact information
Minzhi Wu: Zhejiang Chinese Medical University Fuchun Campus
Paula Cruz-García: University of València

Empirical Economics, 2024, vol. 67, issue 6, No 5, 2565-2606

Abstract: Abstract This paper analyzes the effects of banking diversification and focus strategies on the profitability and risk of Chinese banks in the post-crisis years (2008–2019). For this purpose, semiparametric estimates are used. The main results indicate that Chinese banks do not gain much benefit in terms of profitability and risk from following income or asset diversification strategies, although the former are more beneficial than the latter. These results have important implications for the design of specific diversification strategies for different types of banks. Results suggest that state-owned banks could benefit from a greater degree of diversification to obtain more profits and simultaneously decrease their risk levels, while national shareholding commercial banks and city commercial banks should evaluate these strategies with more caution as the benefits from them are less obvious.

Keywords: Bank; China; Diversification; Focus; Semiparametric regression; G21; G28; C14 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s00181-024-02619-7 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:empeco:v:67:y:2024:i:6:d:10.1007_s00181-024-02619-7

Ordering information: This journal article can be ordered from
http://www.springer. ... rics/journal/181/PS2

DOI: 10.1007/s00181-024-02619-7

Access Statistics for this article

Empirical Economics is currently edited by Robert M. Kunst, Arthur H.O. van Soest, Bertrand Candelon, Subal C. Kumbhakar and Joakim Westerlund

More articles in Empirical Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().