Sustainable Performance of Rural Banking: A Heterogeneity Study in the Coastal Regions of China

Jun Wei ()
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Jun Wei: Beijing Jiaotong University

A chapter in IEIS 2021, 2022, pp 16-23 from Springer

Abstract: Abstract For advantage of the coastal region, this paper focuses on provincial rural banking because of its important place of rural economy in China. In short term, isolated and unilateral performance evaluations in banking lead to over-incentive. However, under-incentive is found in the long runs. With considerations of the inter-temporal effect of long periods, the present paper studies the dynamic total factor productivity evolution by incorporating carry-over activities of deposits. Furthermore, the bad debt risk is always an important risk for banking. In order to minimize the negative effects, based on the heterogeneity impact of non-performing loan on banking in China, negative externality is incorporated into the dynamic Malmquist model. Bottleneck of sustainable TFP in the rural banking industry in China is revealed by hierarchical clustering. The results demonstrate that the inter-temporal utility of deposit is gradually ignored. This implicates that short-term performance of banks is forced to give place to long-term performance.The bad debt risk exist large distances among the provincial rural banks based on the regional heterogeneity.

Keywords: Rural banking; Performance; Total factor productivity; Coastal regional economy; Malmquist index (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnopch:978-981-16-8660-3_3

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DOI: 10.1007/978-981-16-8660-3_3

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