On the Efficiency of Chinese Banks And WTO Challenges

Abstract: After joining the WTO in December 2001, China was given 5 years to completely open up its banking market for international competition. Chinese banks have been renowned for their mounting non-performing loans and low efficiency. Despite gradual reforms, the banking system is still dominated by state ownership and encapsulated monopolistic control. How to raise efficiency is a key to the survival and success of domestic banks, especially the state-owned commercial banks. Two important factors may be responsible for raising efficiency: ownership reform and hard budget constraints. This paper uses a panel data of 22 banks over the period 1995-2001, and employs a stochastic frontier production function to investigate the effects of ownership structure and hard budget constraint on efficiency. Empirical results suggest that non-state banks were 8-18% more efficient than state banks, and that banks facing a harder budget tend to perform better than those heavily capitalized by the state

Object Details

• Location: Deutsche Nationalbibliothek Frankfurt am Main
• Extent: Online-Ressource
• Language: Englisch
• Notes: Postprint ; begutachtet (peer reviewed) ; In: Applied Economics ; 39 (2007) 5 ; 629-643

Classification and Topics

• Classification: Wirtschaft

Contributors, Places and Time

• Event: Veröffentlichung
• (where): Mannheim
• (when): 2007
• Creator: Yao, Shuije

Further information

• DOI: 10.1080/00036840500447799
• URN: urn:nbn:de:0168-ssoar-239579
• Rights: Open Access unbekannt; Open Access; Der Zugriff auf das Objekt ist unbeschränkt möglich.
• Last update: 14.08.2025, 10:54 AM CEST