Comparative Performance of Chinese Commercial Banks Analysis, Findings and Policy Implications外文原文.pdfVIP

Review of Quantitative Finance and Accounting, 16, 149–170, 2001 C 2001 Kluwer Academic Publishers. Manufactured in The Netherlands. Comparative Performance of Chinese Commercial Banks: Analysis, Findings and Policy Implications SHANLING LI, FENG LIU,∗ SUGE LIU, AND G. A. WHITMORE Faculty of Management, McGill University, Montreal, Canada Abstract. This paper investigates the financial performance of Chinese banks by using financial ratio analysis. The analysis shows that the low profitability of state-owned commercial banks results from their higher ratio for non-interest expenses and lower interest margin than joint-equity banks. The much lower profit margin in state-owned banks draws down their levels of ROE and ROA, even with the offsetting effects of more efficient utilization of their assets and higher financial leverage. Although data limitations prevent us from studying the risk profiles of the banks in detail, it is clear that these Chinese banks generated lower returns with higher financial risks than their Western counterparts. The paper concludes with a discussion of major issues affecting Chinese bank performance. Significant difficulties encountered in assessing bank performance are also identified and discussed. Key words: accounting, banks, banking sector, China, comparative performance, financial analysis, financial reporting, policy implications JEL Classification: G21 1. Introduction and motivation for the study The role of the banking sector in the Chinese economy has increased dramatically. Bank re- forms have played an important role in the development of leading industries, the agricultural sector and international trade. Bank loans accounted for 77% of Chinese corporate financing in 1997 and 83% in 1998. The aggregate assets of banking institutions increased by 13.3% in 1997. The aggregate assets of commer