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Local Financing Platform Loan and Performance of City Commercial Banks: Evidence from City Commercial Banks in China

Author

Listed:
  • Wei Kong

    (Xi'an University of Technology)

  • Wenxiu Hu

    (Xi'an University of Technology)

  • Kaicheng Liao

    (Tongji University)

  • Xiaoqiang Ma

    (Northwestern University)

Abstract

This paper investigates the relationship between optimum local financing platform loan and the perfor¬mance of CCBs using data of 68 CCBs during 2010 to 2018. Our results derived from panel threshold regression model show a positive and significant impact of local financing platform loan on the perfor¬mance of CCBs before the upper estimated thresholds. Once the local financing platform loan moves above the upper threshold level, then its impact becomes negative. Further, the same relationship is conducted in sub-samples of eastern, central and western regions. Our findings suggest the policymak¬ers that maintains ideal local financing platform loan is effective to encourage the performance of CCBs.

Suggested Citation

  • Wei Kong & Wenxiu Hu & Kaicheng Liao & Xiaoqiang Ma, 2021. "Local Financing Platform Loan and Performance of City Commercial Banks: Evidence from City Commercial Banks in China," Hacienda Pública Española / Review of Public Economics, IEF, vol. 238(3), pages 81-99, September.
    • Handle: RePEc:hpe:journl:y:2021:v:238:i:3:p:81-99
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    More about this item

    Keywords

    Local financing platforms; Loan; Performance; CCBs;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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