Does Good Financial Performance Mean Good Financial Intermediation in China?:
Chinese banks generate large profits and have relatively low nonperforming loans. However, good financial performance does not, in itself, guarantee that banks efficiently intermediate the economy''s financial resources. This paper first examines how efficient Chinese banks are in financia...
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| 1. Verfasser: | |
|---|---|
| Format: | Elektronisch E-Book |
| Sprache: | English |
| Veröffentlicht: |
Washington, D.C
International Monetary Fund
2009
|
| Schriftenreihe: | IMF Working Papers
Working Paper No. 09/170 |
| Online-Zugang: | UBW01 UEI01 LCO01 SBR01 UER01 SBG01 UBG01 FAN01 UBT01 FKE01 UBY01 UBA01 FLA01 UBM01 UPA01 UBR01 FHA01 FNU01 BSB01 TUM01 URL des Erstveröffentlichers |
| Zusammenfassung: | Chinese banks generate large profits and have relatively low nonperforming loans. However, good financial performance does not, in itself, guarantee that banks efficiently intermediate the economy''s financial resources. This paper first examines how efficient Chinese banks are in financial intermediation, using the stochastic production frontier approach. Quality of loans are controlled for by focusing on net loans and correcting for nonperforming loans; Hong Kong SAR banks are included in the sample to have a more universally representative production frontier. The results suggest that Chinese banks indeed became more efficient during 2001-07. Nevertheless, a majority of banks remain quite inefficient, including several large state owned banks and many city banks. Large banks tend to hoard deposits and operate beyond the point of diminishing returns to scale, while smaller banks operate at increasing returns to scale. This suggests that reallocating deposits from large to smaller banks would increase overall efficiency. The paper finds no significant correlation between bank efficiency and profitability. Possible factors leading to large profits in the banking system, despite wide-spread inefficiencies, are low deposit interest rates, large interest margins, and high market concentration. Moving to indirect monetary policy and deepening capital markets to channel some of the savings to productive investment would help improve the efficiency of financial intermediation. This may spur loan growth, however, which will need to be handled with monetary policy and regulatory/supervisory tools |
| Beschreibung: | 1 Online-Ressource (32 p) |
| ISBN: | 1451873174 9781451873177 |
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| 520 | 3 | |a Chinese banks generate large profits and have relatively low nonperforming loans. However, good financial performance does not, in itself, guarantee that banks efficiently intermediate the economy''s financial resources. This paper first examines how efficient Chinese banks are in financial intermediation, using the stochastic production frontier approach. Quality of loans are controlled for by focusing on net loans and correcting for nonperforming loans; Hong Kong SAR banks are included in the sample to have a more universally representative production frontier. The results suggest that Chinese banks indeed became more efficient during 2001-07. Nevertheless, a majority of banks remain quite inefficient, including several large state owned banks and many city banks. Large banks tend to hoard deposits and operate beyond the point of diminishing returns to scale, while smaller banks operate at increasing returns to scale. This suggests that reallocating deposits from large to smaller banks would increase overall efficiency. The paper finds no significant correlation between bank efficiency and profitability. Possible factors leading to large profits in the banking system, despite wide-spread inefficiencies, are low deposit interest rates, large interest margins, and high market concentration. Moving to indirect monetary policy and deepening capital markets to channel some of the savings to productive investment would help improve the efficiency of financial intermediation. This may spur loan growth, however, which will need to be handled with monetary policy and regulatory/supervisory tools | |
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| index_date | 2024-07-03T20:13:27Z |
| indexdate | 2024-07-10T09:35:35Z |
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| record_format | marc |
| series2 | IMF Working Papers |
| spelling | Feyzioglu, Tarhan Verfasser aut Does Good Financial Performance Mean Good Financial Intermediation in China? Feyzioglu, Tarhan Washington, D.C International Monetary Fund 2009 1 Online-Ressource (32 p) txt rdacontent c rdamedia cr rdacarrier IMF Working Papers Working Paper No. 09/170 Chinese banks generate large profits and have relatively low nonperforming loans. However, good financial performance does not, in itself, guarantee that banks efficiently intermediate the economy''s financial resources. This paper first examines how efficient Chinese banks are in financial intermediation, using the stochastic production frontier approach. Quality of loans are controlled for by focusing on net loans and correcting for nonperforming loans; Hong Kong SAR banks are included in the sample to have a more universally representative production frontier. The results suggest that Chinese banks indeed became more efficient during 2001-07. Nevertheless, a majority of banks remain quite inefficient, including several large state owned banks and many city banks. Large banks tend to hoard deposits and operate beyond the point of diminishing returns to scale, while smaller banks operate at increasing returns to scale. This suggests that reallocating deposits from large to smaller banks would increase overall efficiency. The paper finds no significant correlation between bank efficiency and profitability. Possible factors leading to large profits in the banking system, despite wide-spread inefficiencies, are low deposit interest rates, large interest margins, and high market concentration. Moving to indirect monetary policy and deepening capital markets to channel some of the savings to productive investment would help improve the efficiency of financial intermediation. This may spur loan growth, however, which will need to be handled with monetary policy and regulatory/supervisory tools Online-Ausg http://elibrary.imf.org/view/IMF001/10352-9781451873177/10352-9781451873177/10352-9781451873177.xml Verlag URL des Erstveröffentlichers Volltext |
| spellingShingle | Feyzioglu, Tarhan Does Good Financial Performance Mean Good Financial Intermediation in China? |
| title | Does Good Financial Performance Mean Good Financial Intermediation in China? |
| title_auth | Does Good Financial Performance Mean Good Financial Intermediation in China? |
| title_exact_search | Does Good Financial Performance Mean Good Financial Intermediation in China? |
| title_exact_search_txtP | Does Good Financial Performance Mean Good Financial Intermediation in China? |
| title_full | Does Good Financial Performance Mean Good Financial Intermediation in China? Feyzioglu, Tarhan |
| title_fullStr | Does Good Financial Performance Mean Good Financial Intermediation in China? Feyzioglu, Tarhan |
| title_full_unstemmed | Does Good Financial Performance Mean Good Financial Intermediation in China? Feyzioglu, Tarhan |
| title_short | Does Good Financial Performance Mean Good Financial Intermediation in China? |
| title_sort | does good financial performance mean good financial intermediation in china |
| url | http://elibrary.imf.org/view/IMF001/10352-9781451873177/10352-9781451873177/10352-9781451873177.xml |
| work_keys_str_mv | AT feyzioglutarhan doesgoodfinancialperformancemeangoodfinancialintermediationinchina |