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The effects of bank privatization on performance and prudential behavior in China: does state ownership matter?

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  • Maoyong Cheng
  • Hong Zhao
  • Jerry W. Lin

Abstract

Using China’s data from 2000 to 2013, we examine the effects of bank privatization on performance and prudential behavior, and find the following results. First, bank operating efficiency, credit risk, and prudential behavior have improved after introducing foreign strategic investors (FSIs). However, these effects are diminished as time passes. Second, going public increases bank profitability, operating efficiency, and prudential behavior, and reduces credit risk, which are also reversed as time passes. Finally, the effects of introducing FSIs on credit risk and prudential behavior are weaker for state-owned banks than for other banks, while the opposite is true for going public.

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  • Maoyong Cheng & Hong Zhao & Jerry W. Lin, 2017. "The effects of bank privatization on performance and prudential behavior in China: does state ownership matter?," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 24(3-4), pages 387-406, October.
    • Handle: RePEc:taf:raaexx:v:24:y:2017:i:3-4:p:387-406
    DOI: 10.1080/16081625.2016.1187071
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    Cited by:

    1. Mutarindwa, Samuel & Siraj, Ibrahim & Stephan, Andreas, 2021. "Ownership and bank efficiency in Africa: True fixed effects stochastic frontier analysis," Journal of Financial Stability, Elsevier, vol. 54(C).

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