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Can foreign banks compete in China?

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  • Necmi K. Avkiran
  • Yushu Zhu
  • David W. L. Tripe
  • Kathleen Walsh

Abstract

Foreign banks in China have faced strict regulatory requirements that were not imposed on domestic banks and as such they have performed poorly in profitability rankings. Recent changes in the Chinese regulatory requirements prompt us to consider whether foreign banks are now on an equal footing with the Chinese domestic banks. Using Cobb–Douglas stochastic frontier analysis with total income as the dependent variable, we find no significant performance difference between foreign and domestic banks. However, robustness testing using the individual components of total income as dependent variables reveals that foreign banks need to improve efficiency of their income generation.

Suggested Citation

  • Necmi K. Avkiran & Yushu Zhu & David W. L. Tripe & Kathleen Walsh, 2017. "Can foreign banks compete in China?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 57(4), pages 961-980, December.
    • Handle: RePEc:bla:acctfi:v:57:y:2017:i:4:p:961-980
    DOI: 10.1111/acfi.12188
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    Cited by:

    1. Necmi Kemal Avkiran & Lin Mi, 2017. "The Rising Systemic Importance of Chinese Banks: Should the World Be Concerned?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 50(4), pages 427-440, December.
    2. Eleftheria Koniari, 2017. "Greek Foreign Direct Investments In South-Eastern Europe," Economics and Management, Faculty of Economics, SOUTH-WEST UNIVERSITY "NEOFIT RILSKI", BLAGOEVGRAD, vol. 13(1), pages 67-83.
    3. Jiang, Jiangang & Zhang, Jianhong, 2023. "Does political ideology matter in Chinese cross-border acquisitions?," Journal of Business Research, Elsevier, vol. 161(C).
    4. Cynthia W. Cai & Martina K. Linnenluecke & Mauricio Marrone & Abhay K. Singh, 2019. "Machine Learning and Expert Judgement: Analyzing Emerging Topics in Accounting and Finance Research in the Asia–Pacific," Abacus, Accounting Foundation, University of Sydney, vol. 55(4), pages 709-733, December.
    5. Guy Schofield, 2020. "Evidence of governance arbitrage by private equity sponsors," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(S1), pages 971-1005, April.
    6. Jiang, Wei & Liu, Yunguo & Lobo, Gerald J. & Xu, Yue, 2019. "Deferred cash compensation and risk-taking: Evidence from the Chinese banking industry," Pacific-Basin Finance Journal, Elsevier, vol. 53(C), pages 432-448.
    7. Delaney, Judith M. & Devereux, Paul J., 2019. "Understanding gender differences in STEM: Evidence from college applications✰," Economics of Education Review, Elsevier, vol. 72(C), pages 219-238.
    8. Luqiao Zhang & Biao Mi & Yun Shen & Liang Han, 2023. "When in Rome, do as the Romans do: loan syndication in a state-dominated market," Review of Quantitative Finance and Accounting, Springer, vol. 60(4), pages 1469-1494, May.
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    10. M.V. Leonov, 2021. "Review of Modern Approaches for Assessing the Effectiveness of Banking," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 20(2), pages 294-326.

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