The effects of bank privatization on performance and prudential behavior in China: does state ownership matter?

Maoyong Cheng, Hong Zhao and Jerry W. Lin

Asia-Pacific Journal of Accounting & Economics, 2017, vol. 24, issue 3-4, 387-406

Abstract: Using China’s data from 2000 to 2013, we examine the effects of bank privatization on performance and prudential behavior, and find the following results. First, bank operating efficiency, credit risk, and prudential behavior have improved after introducing foreign strategic investors (FSIs). However, these effects are diminished as time passes. Second, going public increases bank profitability, operating efficiency, and prudential behavior, and reduces credit risk, which are also reversed as time passes. Finally, the effects of introducing FSIs on credit risk and prudential behavior are weaker for state-owned banks than for other banks, while the opposite is true for going public.

Date: 2017
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DOI: 10.1080/16081625.2016.1187071

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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