Regional Performance of China's Banks: Evidence from Industrial and Commercial Bank of China

Wen Yang (), Yi-Cheng Liu (), Shin-Ying Mai () and Chao-Cheng Mai ()
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Wen Yang: Department of Statistics, Tamkang University, No. 151 Yingzhuan Rd., Tamsui District, New Taipei City 25137, Taiwan, R.O.C.
Yi-Cheng Liu: Department of International Business, Tamkang University, No. 151 Yingzhuan Rd., Tamsui District, New Taipei City 25137, Taiwan, R.O.C.
Shin-Ying Mai: C.I.T. Group, USA
Chao-Cheng Mai: Department of Industrial Economics, Tamkang University, R.O.C.;

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2015, vol. 18, issue 03, 1-25

Abstract: This paper investigates regional performances of China's and the world's largest commercial bank: the Industrial and Commercial Bank of China (ICBC), by its spatial patterns and geographical distribution of deposits. MoranIof Geoda software and the Local Indicators of Spatial Association (LISA) are applied. Empirical evidence shows that overall performances of ICBC depended consistently on Yangtze River Delta and Bohai Sea region while performances of other regions were relatively lower-performed during this period. Interestingly, branches performances in coastal provinces were not necessarily better than those in interior provinces because branches in Pearl River Delta were constantly under-performed. Furthermore, we identified that spatial effects and workers population have large, statistically significant impacts on branches' performances by employing spatial econometric tools. However, workers population have reverse effects on deposits performances. Evidences indicate that the bank branches performances of deposits rely on transferring deposits from less worker-concentrated areas or acquiring deposits through other sources: corporate, governmental accounts. It is the competitive advantage that ICBC becomes the most profitable bank from economies of scales and scopes in procuring deposit through various sources and making loans in worker-populated areas where funds are highly demanded. These also illuminate the future improvement and direction for bank management and government policy.

Keywords: Geospatial analysis; LISA; spatial econometric model; Industrial and Commercial Bank of China (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1142/S0219091515500204

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