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Off-Balance Sheet Activities And Bank Risks: An Investigation Of The Listed Commercial Banks In China (1999–2013)

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  • KANGWEI YE

    (Department of Finance, Jinan University, Huangpu Road Middle No. 601, Guangzhou 510632, P. R. China;
    Department of Finance and Institute of Finance, Jinan University, China;
    University of California Irvine, U.S.A)

Abstract

Based on a broad set of 16 listed commercial banks in China during the period 1999–2013, this paper makes the empirical analysis of the relationship between the development of off-balance sheet (OBS) activities and the banks' overall risk, bankruptcy risk and credit risk. Innovation of this article is mainly reflected in: (1) Considering different types of risk variables, it gives a more comprehensive disclosure of the bank's risk characteristics. (2) Dividing the research object into joint-stock commercial banks and state-owned commercial banks, and get some new test results: The development of OBS business of state-owned commercial banks increases the overall risk, bankruptcy risk and credit risk significantly. While in joint-stock commercial banks sample, the development of OBS business reduces the overall risk significantly.

Suggested Citation

  • Kangwei Ye, 2015. "Off-Balance Sheet Activities And Bank Risks: An Investigation Of The Listed Commercial Banks In China (1999–2013)," Annals of Financial Economics (AFE), World Scientific Publishing Co. Pte. Ltd., vol. 10(01), pages 1-21.
    • Handle: RePEc:wsi:afexxx:v:10:y:2015:i:01:n:s2010495215500049
    DOI: 10.1142/S2010495215500049
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    References listed on IDEAS

    as
    1. Iana Liadze & Ray Barrell & Professor E. Philip Davis, 2010. "Evaluating off-balance sheet exposures in banking crisis determination models," National Institute of Economic and Social Research (NIESR) Discussion Papers 357, National Institute of Economic and Social Research.
    2. Simon H. Kwan, 1998. "Securities activities by commercial banking firms' Section 20 subsidiaries: risk, return and diversification benefits," Working Papers in Applied Economic Theory 98-10, Federal Reserve Bank of San Francisco.
    3. Iana Liadze & Ray Barrell & Professor E. Philip Davis, 2010. "Evaluating off-balance sheet exposures in banking crisis determination models," National Institute of Economic and Social Research (NIESR) Discussion Papers 357, National Institute of Economic and Social Research.
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    More about this item

    Keywords

    Off-balance sheet activities; commercial banks; overall risk; bankruptcy risk; credit risk; G21; G28; G32;
    All these keywords.

    JEL classification:

    • 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
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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