Bank Lending Margins in China and the Effects of the June 2012 Liberalization

Richard Burdekin and Ran Tao ()
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Ran Tao: University of Wisconsin-Whitewater, HH4407, Whitewater, Wisconsin 53190, USA

Journal of International Commerce, Economics and Policy (JICEP), 2014, vol. 05, issue 02, 1-19

Abstract: Financial liberalization in China has begun to allow more flexibility in bank interest rate setting but may threaten bank profit margins. This paper documents the initial response to the June 2012 initiative that, for the first time, allowed Chinese banks to meaningfully depart from the benchmark rates laid down by the People's Bank. We use an event study to assess the initial effects on bank share prices and compare the response of the larger state-owned banks to the smaller commercial banks. We identify significant reactions in both the Shanghai and Hong Kong markets.

Keywords: China; banks; lending; regulation; E44; E50 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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DOI: 10.1142/S1793993314500033

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