The Impacts of Competition and Shadow Banking on Profitability: Evidence from the Chinese Banking Industry

44 Pages Posted: 17 May 2017 Last revised: 30 Jul 2017

See all articles by Yong Tan

Yong Tan

University of Huddersfield - Business School

Date Written: May 13, 2017

Abstract

This paper contributes to the empirical literature in banking profitability by testing the impacts of competition and shadow banking on bank profitability using a sample of 100 Chinese commercial banks over 2003-2013 with 417 and 395 observations. The current study fills the gaps in the empirical studies by examining the competition in different banking markets (i.e. deposit market, loan market and non-interest income markets) in China and further evaluate their impacts on bank profitability. The findings show that the non-interest income market has a higher level of competition compared to the deposit market and loan market. It is further reported that a lower level of competition in deposit market leads to an increase in the profitability of Chinese commercial banks. Finally, the results suggest that shadow banking improves the profitability of Chinese banks.

Keywords: shadow banking, bank competition, bank profitability, China

JEL Classification: G21, C23

Suggested Citation

Tan, Yong, The Impacts of Competition and Shadow Banking on Profitability: Evidence from the Chinese Banking Industry (May 13, 2017). North American Journal of Economics and Finance, Vol. 42, 89-106, 2017, Available at SSRN: https://ssrn.com/abstract=2967922 or http://dx.doi.org/10.2139/ssrn.2967922

Yong Tan (Contact Author)

University of Huddersfield - Business School ( email )

Queensgate
Huddersfield, HD1 3DH
United Kingdom
+44(0)148447 3578 (Phone)

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