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

International Journal of the Economics of Business

36 Pages Posted: 3 Nov 2017 Last revised: 5 Aug 2020

See all articles by Yong Tan

Yong Tan

University of Huddersfield - Business School

Chi Keung Marco Lau

Teesside University

Giray Gozgor

Istanbul Medeniyet University

Date Written: November 1, 2017

Abstract

The current study contributes to the banking literature by testing the joint impacts of competition and profitability on different types of risk (credit risk, liquidity risk, capital risk and insolvency risk) of a sample of Chinese commercial banks over the period 2003-2015 under an ordinary least square estimator. The robustness of the results is cross checked in different ways. The results show that a higher level of competition leads to financial fragility in the Chinese banking industry and profitability leads to an increase in the volume of non-performing loans of Chinese commercial banks. The findings from the current study provide important policy implications to improve stability in the Chinese banking industry.

Keywords: competition, risk, efficiency, Chinese banking

JEL Classification: G21, C33, C14

Suggested Citation

Tan, Yong and Lau, Chi Keung Marco and Gozgor, Giray, The Impacts of Competition and Profitability on Stability: Evidence from the Chinese Banking Industry (November 1, 2017). International Journal of the Economics of Business , Available at SSRN: https://ssrn.com/abstract=3063564 or http://dx.doi.org/10.2139/ssrn.3063564

Yong Tan (Contact Author)

University of Huddersfield - Business School ( email )

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

Chi Keung Marco Lau

Teesside University ( email )

Tees Valley
Middlesbrough
Middlesbrough, Middlesbrough TS1 3BX
United Kingdom

HOME PAGE: http://https://research.tees.ac.uk/en/persons/chi-lau

Giray Gozgor

Istanbul Medeniyet University ( email )

D-100 Karayolu
Merdivenkoy Mevkii No:6/1 Goztepe/Kadıkoy
Istanbul
Turkey

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