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The Determinants of Bank Performance in China
Shelagh Heffernan1; Maggie Fu2
Conference Name21st Australasian Finance and Banking Conference
Source Publication21st Australasian Finance and Banking Conference
Conference Date16 - 18 December, 2008
Conference PlaceShangri-La Hotel in Sydney

China's banking system has undergone gradual reform since 1978, with a view to improving efficiency and resource allocation. Recent reforms have focused on allowing banks to list some shares on domestic and foreign exchanges, greater foreign equity participation in Chinese banks, and the establishment of new rural financial institutions. To assess whether these objectives have been achieved, this study looks at how well different types of Chinese banks have performed between 1999 and 2006, and tests for the factors influencing performance. It also evaluates four measures of performance to identify which one, if any, is superior. Theindependent variables include the standard financial ratios, those which reflect more recent reforms (listing, bank type, the extent of foreign ownership) and macroeconomic variables. The results suggest economic value added and the net interest margin do better than the more conventional measures of profitability, namely ROAE and ROAA. Some macroeconomic variables and financial ratios are significant with theexpected signs. Though the type of bank is influential, bank size is not. Neither the percentage of foreign ownership nor bank listings has a discernable effect.

KeywordPerformance Measures Bank Reforms Foreign Ownership Listing Corporate Governance
Fulltext Access
Document TypeConference paper
Affiliation1.City University London - Sir John Cass Business School
2.University of Macau - Faculty of Business Administration
Recommended Citation
GB/T 7714
Shelagh Heffernan,Maggie Fu. The Determinants of Bank Performance in China[C],2008.
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