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Incentive contracts and bank performance

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  • Hongbin Li
  • Scott Rozelle
  • Li‐An Zhou

Abstract

This paper, using unique survey data from the banking industry in rural China, investigates the effect of incentive contracts on performance. In the context of China's economic transition, we find that the incentive contracts have a positive effect on the bank manager's performance in deposit taking and non‐performing loan reduction. This finding is robust when we control for the endogeneity of incentive contracts. Our empirical results present evidence on the positive effects of incentive‐based banking reforms in rural China.

Suggested Citation

  • Hongbin Li & Scott Rozelle & Li‐An Zhou, 2007. "Incentive contracts and bank performance," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 15(1), pages 109-124, January.
    • Handle: RePEc:bla:etrans:v:15:y:2007:i:1:p:109-124
    DOI: 10.1111/j.1468-0351.2007.00273.x
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    2. Daniela Kletzan-Slamanig & Angela Köppl & Hans Pitlik & Margit Schratzenstaller, 2023. "Der Finanzausgleich als Hebel zur Umsetzung der österreichischen Klimaziele. Handlungsfelder und konzeptionelle Grundlagen," WIFO Studies, WIFO, number 70785.
    3. Isaev, Mirolim & Masih, Mansur, 2017. "Macroeconomic and bank-specific determinants of different categories of non-performing financing in Islamic banks: Evidence from Malaysia," MPRA Paper 79719, University Library of Munich, Germany.
    4. Louzis, Dimitrios P. & Vouldis, Angelos T. & Metaxas, Vasilios L., 2012. "Macroeconomic and bank-specific determinants of non-performing loans in Greece: A comparative study of mortgage, business and consumer loan portfolios," Journal of Banking & Finance, Elsevier, vol. 36(4), pages 1012-1027.
    5. de la Parra, I. & Muñoz, M. & Lorenzo, E. & García, M. & Marcos, J. & Martínez-Moreno, F., 2017. "PV performance modelling: A review in the light of quality assurance for large PV plants," Renewable and Sustainable Energy Reviews, Elsevier, vol. 78(C), pages 780-797.
    6. Angelos T. Vouldis & Dimitrios P. Louzis, 2018. "Leading indicators of non-performing loans in Greece: the information content of macro-, micro- and bank-specific variables," Empirical Economics, Springer, vol. 54(3), pages 1187-1214, May.
    7. Petr Jakubik & Eyup Kadioglu, 2022. "Factors affecting bank loan quality: a panel analysis of emerging markets," International Economics and Economic Policy, Springer, vol. 19(3), pages 437-458, July.

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