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Deregulation, bank efficiency and economic cooperation across China–Taiwan Strait

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  • Liao, Chang-Sheng

Abstract

This study investigates whether deregulation has affected bank efficiency in the ‘cross-strait’ relationship between China and Taiwan. I measure bank efficiency across three periods – after Taiwan and China joined the World Trade Organization, the global financial crisis, and the signing of the Economic Cooperation Framework Agreement (ECFA) – and show that Taiwanese banks were significantly more efficient than their Chinese counterparts. These results show that the ECFA platform has not improved bank efficiency and thus has failed to function effectively. This finding suggests that China and Taiwan should continue negotiating within the ECFA context to enhance cross-strait financial cooperation.

Suggested Citation

  • Liao, Chang-Sheng, 2023. "Deregulation, bank efficiency and economic cooperation across China–Taiwan Strait," Journal of Policy Modeling, Elsevier, vol. 45(2), pages 430-444.
    • Handle: RePEc:eee:jpolmo:v:45:y:2023:i:2:p:430-444
    DOI: 10.1016/j.jpolmod.2022.12.002
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    1. Huang, Siyuan & Lu, Siqi, 2024. "Did the 'Early harvest list' of commodity trade under ECFA promote the development of manufacturing industry in Taiwan Province? An empirical analysis based on staggered DID model," Finance Research Letters, Elsevier, vol. 59(C).

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    More about this item

    Keywords

    Cross-Strait Economic Cooperation Framework Agreement (ECFA); World Trade Organization (WTO); Bank efficiency; Marketability efficiency; Profitability efficiency;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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