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Bank specific and macroeconomic determinants of bank profitability: Empirical evidence from the China banking sector

  • Research Article
  • Published:
Frontiers of Economics in China

Abstract

This paper seeks to examine the determinants of the profitability of the Chinese banking sector during the post-reform period of 2000–2005. The empirical findings from this study suggest that all the determinants variables have statistically significant impact on China banks profitability. However, the impacts are not uniform across bank types. We find that liquidity, credit risk, and capitalization have positive impacts on the state owned commercial banks (SOCBs) profitability, while the impact of cost is negative. Similar to their SOCB counterparts, we find that joint stock commercial banks (JSCB) with higher credit risk tend to be more profitable, while higher cost results in a lower JSCB profitability levels. During the period under study, the empirical findings suggest that size and cost results in a lower city commercial banks (CITY) profitability, while the more diversified and relatively better capitalized CITY tend to exhibit higher profitability levels. The impact of economic growth is positive, while growth in money supply is negatively related to the SOCB and CITY profitability levels.

摘要

为了解中国银行业在2000–2005年盈利的各项决定因素, 对中国的银行业进行实证研究, 发现一些相关变量对其盈利能力具有的显著影响, 并且根据银行的类型影响各有差别: 在国有商业银行中, 流动性、 信贷风险及股份化同盈利能力正相关, 成本同盈利能力负相关; 在股份制商业银行中, 信贷风险同盈利能力正相关, 高成本同盈利能力负相关; 在城市商业银行中, 规模越大, 成本越高, 则盈利能力减弱, 而股权较分散, 资本结构较好, 则盈利能力较高; 经济增长同中国的银行盈利能力正相关, 货币供给增加同国有商业银行和城市商业银行的盈利水平负相关。

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Authors and Affiliations

  1. Khazanah Research and Investment Strategy, Khazanah Nasional Berhad, Kuala Lumpur, 50088, Malaysia

    Fadzlan Sufian

  2. Department of Economics, Faculty of Economics and Management, University Putra Malaysia, Selangor, 43400, Malaysia

    Fadzlan Sufian & Muzafar Shah Habibullah

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  1. Fadzlan Sufian
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  2. Muzafar Shah Habibullah
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Correspondence to Fadzlan Sufian.

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Sufian, F., Habibullah, M.S. Bank specific and macroeconomic determinants of bank profitability: Empirical evidence from the China banking sector. Front. Econ. China 4, 274–291 (2009). https://doi.org/10.1007/s11459-009-0016-1

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  • DOI: https://doi.org/10.1007/s11459-009-0016-1

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