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China’s anti-corruption campaign and bank loan loss provisions: Evidence from a quasi-natural experiment

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  • Tao, Yunqing

Abstract

This paper employs a difference-in-differences estimation to investigate the causal effects of the anti-corruption campaign on bank loan loss provisions in China. I find that the anti-corruption campaign has significantly reduced bank loan loss provisions. My finding are particularly pronounced in joint-stock commercial and city commercial banks. I analyze the mechanism from the perspective of bank risk management, and find that banks with less non-performing loans and more risk reserves have less provision for loan losses in the anti-corruption campaign, indicating that risk prevention motivation is its main purpose.

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  • Tao, Yunqing, 2020. "China’s anti-corruption campaign and bank loan loss provisions: Evidence from a quasi-natural experiment," Economics Letters, Elsevier, vol. 196(C).
    • Handle: RePEc:eee:ecolet:v:196:y:2020:i:c:s0165176520303098
    DOI: 10.1016/j.econlet.2020.109505
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    References listed on IDEAS

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    Cited by:

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    2. Germaschewski, Yin & Horvath, Jaroslav & Rubini, Loris, 2021. "Property rights, expropriations, and business cycles in China," Journal of Economic Dynamics and Control, Elsevier, vol. 125(C).
    3. Huang, Zhuo & Tao, Yunqing & Zhang, Qidi & Ye, Yongwei, 2023. "The road to entrepreneurship: The effect of China's broadband infrastructure construction," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1831-1847.

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    More about this item

    Keywords

    Anti-corruption campaign; Bank loan loss provisions; Risk prevention motivation; Difference-in-differences;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

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