Risk, capital and efficiency in Chinese Banking

Yong Tan, Christos Floros

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Abstract

We assess the relationship between bank efficiency, risk and capital for a sample of Chinese commercial banks employing three efficiency indexes and four risk indicators under a three stage least square method in a panel data framework. The empirical evidence suggests that there is a positive and significant relationship between risk (loan-loss provision as a fraction to total loans or LLPTL) and efficiency in Chinese banking industry, while the relationship between risk (Z-score) and level of capitalization is negative and significant.
Original languageEnglish
Pages (from-to)378-393
Number of pages16
JournalJournal of International Financial Markets, Institutions and Money
Volume26
DOIs
Publication statusPublished - 2013

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