Development of the Chinese financial system and reform of Chinese commercial banks

Luo, Dan (2010) Development of the Chinese financial system and reform of Chinese commercial banks. PhD thesis, University of Nottingham.

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Comprehensive economic reform in China from 1978 has introduced profound restructuring of its financial system, in particular the banking sector. Recent initiatives have focused on ownership transformation via foreign participation and stock listing. China's stock markets have reacted highly positively to the Initial Public Offering (IPO) of Chinese commercial banks. As stock listing has been considered as an effective tool to enhance the corporate governance of the firms, a case study using China Construction Bank (CCB) had been conducted to get a more detailed understanding of in what aspects had the corporate governance of the listed banks been enhanced after IPO? By comparing the annual reports of CCB from 1999 to 2008, I found that the bank had made quite profound and comprehensive changes since its IPO in 2005. In all major areas required by the corporate governance principles, the CCB had displayed a very high level of compliance although flaws in some fundamental aspects still existed.

Since the end of 2007, the US credit crunch had induced turmoil in the global financial market that caused the collapse of several world banking giants. Nonetheless, Chinese commercial banks had stood apart from the rest of the world and achieved remarkable results. With improved corporate governance, we further tested whether the banks' performance had been enhance after IPO? Meanwhile, the influence of the financial crisis to China's financial market and the future reform of its banking sector had also been addressed in this thesis.

Employing data of 14 listed Chinese banks for the period 1999 to 2008, we applied both Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA) to test our hypotheses. Our findings suggested that stock listing indeed could enhance the pure technical efficiency of the banks by about 5% and also improve their scale economies.

A major contribution of this thesis is that it is the first study in English to employ two different frontier approaches to evaluate the effectiveness of IPO on the efficiency of Chinese banks. It also contributes to the growing literatures on the corporate governance issues related to IPO and firm performances, in particular under the background of China.

Item Type: Thesis (University of Nottingham only) (PhD)
Supervisors: Yao, S.
Morgan, S.
Keywords: Banks and banking,China
Subjects: H Social sciences > HG Finance
Faculties/Schools: UK Campuses > Faculty of Social Sciences, Law and Education > School of Contemporary Chinese Studies
Item ID: 13071
Depositing User: EP, Services
Date Deposited: 04 Feb 2013 14:37
Last Modified: 13 Sep 2016 21:44

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