Emerging Markets Banks Ownership and Performance: Evidence from China

Xiaoxi Zhang and Kevin Daly

Chapter 13 in Corporate Governance and Corporate Social Responsibility:Emerging Markets Focus, 2014, pp 347-374 from World Scientific Publishing Co. Pte. Ltd.

Abstract: In the last decade, the Chinese government-owned banks have undergone a privatization program resulting in considerable changes in ownership of Chinese banks. These changes invite important questions to be answered. In particular how have banks changed in terms of performance indicators with changes in ownership structure? This chapter attempts to answer these questions by employing an econometric model that utilizes the performance effects of various types of bank ownership. By using the panel data of China's banks during the period from 2003–2010, we carry out a series of regressions to analyze the performance effects of various forms of bank ownership including state-owned banks, city commercial banks, rural commercial banks, other commercial banks, foreign banks in China and overseas subsidiaries. Our results indicate that the Big Four state-owned commercial banks are less profitable than the other forms of ownership considered. In terms of overall performance, our results indicate that both overseas subsidiaries of Chinese's banks and foreign banks operating within China are highly profitable, earning significant returns on assets and in the case of the so-called City banks the results report a high and positive return on equity (ROE). Interestingly the major four state-owned banks indicate the lowest performance across the various ownership structures examined in terms of returns on assets, percentage of non-performing loans and non-interest expenses (NIE).

Keywords: Corporate Governance; Corporate Social Responsibility; Ethics; Emerging Markets (search for similar items in EconPapers)
Date: 2014
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