The IPO of Industrial and Commercial Bank of China and the 'Chinese Model' of Privatizing Large Financial Institutions

Franklin Allen, Susan Chenyu Shan, Jun Qian and Mengxin Zhao
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Franklin Allen: University of PA
Susan Chenyu Shan: University of Hong Kong
Jun Qian: Boston College
Mengxin Zhao: University of Alberta

Working Papers from University of Pennsylvania, Wharton School, Weiss Center

Abstract: We examine the reform and privatization process of the Industrial and Commercial Bank of China (ICBC) and its IPO in both the Hong Kong and Shanghai Stock exchanges in October 2006. The Chinese government retains majority ownership stake of ICBC, while foreign institutional investors hold minority stakes. Such an ownership structure of a company listed in exchanges outside mainland China represents how the government privatizes its financial intermediation sector, which was dominated by large and inefficient state-owned institutions. The largest Chinese banks, as a group, outperformed their counterparts from other emerging and developed markets before and during the 2007-2009 financial crisis. We argue that the 'Chinese model' of privatizing and managing large financial institutions can be used in other developing countries.

JEL-codes: G20 G30 L10 (search for similar items in EconPapers)
Date: 2011-10
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