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The Impact of Deposit Insurance on the Risks and Returns of Commercial Banks: Evidence from China
Ming-Hua Liu1; Yang Zhang1; Kaimeng Zheng2
2019-03-31
Source PublicationJournal of Financial Studies
ISSN1022-2898
Volume27Issue:1Pages:1-29
Abstract

We examine the impact of China’s newly implemented deposit insurance policy on the risks and returns of listed Chinese commercial banks. Using a standard event study methodology, we find a positive and statistically significant influence of deposit insurance policy announcement on shareholders’ wealth of listed Chinese banks, especially when volume-weighted average stock returns are analyzed. Further analysis shows that joint-equity banks benefit more from the announcements. Using the Z-score and liquidity ratio as proxies of bank risks, we find that deposit insurance policies tend to increase bank risks, probably due to the moral-hazard problem.

KeywordChinese Banks Deposit Insurance Z-score Liquidity Risk Event Study
DOI10.6545/JFS.201903_27(1).0001
Language英语
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Document TypeJournal article
CollectionDEPARTMENT OF FINANCE AND BUSINESS ECONOMICS
Corresponding AuthorMing-Hua Liu
Affiliation1.Business Administration, University of Macau
2.China Council, Promotion of International Trade Intellectual Property Service Center
First Author AffilicationUniversity of Macau
Corresponding Author AffilicationUniversity of Macau
Recommended Citation
GB/T 7714
Ming-Hua Liu,Yang Zhang,Kaimeng Zheng. The Impact of Deposit Insurance on the Risks and Returns of Commercial Banks: Evidence from China[J]. Journal of Financial Studies,2019,27(1):1-29.
APA Ming-Hua Liu,Yang Zhang,&Kaimeng Zheng.(2019).The Impact of Deposit Insurance on the Risks and Returns of Commercial Banks: Evidence from China.Journal of Financial Studies,27(1),1-29.
MLA Ming-Hua Liu,et al."The Impact of Deposit Insurance on the Risks and Returns of Commercial Banks: Evidence from China".Journal of Financial Studies 27.1(2019):1-29.
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