Non-Performing Loans and Productivity in Chinese Banks: 1997-2006

Kent Matthews, Jianguang Guo and Nina Zhang

No E2008/17, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: This study examines the productivity growth of the nationwide banks of China over the ten years to 2006. Using a bootstrap method for the Malmquist index estimates of productivity growth are constructed with appropriate confidence intervals. The paper adjusts for the quality of the output by accounting for the non-performing loans on the balance sheets and test for the robustness of the results by examining alternative sets of outputs. The productivity growth of the state-owned banks is compared with the Joint-stock banks and it determinants evaluated. The paper finds that average productivity of the Chinese banks improved modestly over this period. Adjusting for the quality of loans, by treating NPLs as an undesirable output, the average productivity growth of the state-owned banks was zero or negative while productivity of the Joint-Stock banks was markedly higher.

Keywords: Bank Efficiency; Productivity; Malmquist index; Bootstrapping (search for similar items in EconPapers)
JEL-codes: D24 G21 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2007-11, Revised 2008-08
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-cna, nep-eff and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in The Chinese Economy , 42, 2, pp. 30-47

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Related works:
Journal Article: Nonperforming Loans and Productivity in Chinese Banks, 1997-2006 (2009)
Working Paper: Non-Performing Loans and Productivity in Chinese Banks: 1997-2006 (2007)
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