The Measurement of China Banking Competition: Based on The Panzar-Rosse

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Li, Chen (2019) The Measurement of China Banking Competition: Based on The Panzar-Rosse. [Dissertation (University of Nottingham only)]

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Abstract

Over the past four decades, comprehensive deepening of reform is conducive to the rapid development of the Chinese economy. From the macro-aspect, establishing a market-oriented banking system is essential to promote the stable development of the national economy. From the microscopic visual angle, an efficient and diversified banking system is fundamental for financial stability and high-quality financial services. However, since the nature of big five state-owned commercial banks and the imbalance in the development of the Chinese commercial banks, the deregulation in Chinese banking system, reduction of policy benefits and efficiency improvement are the keys to the future development of Chinese banking system. Although an increasing number of researchers assessed the competition of Chinese banking industry, few of them examined the trend of Chinese banking competition and the competition conditions of different ownership types of Chinese commercial banks.

Employing dynamic and static Panzar-Rosse model, concentration ratio and Herfindahl-Hirschman Index, this paper investigates the competition status of Chinese banking sector over the period of 2010 to 2017. The 55 estimation sample banks include five state-owned commercial banks, ten joint-stock commercial banks, 32 city commercial banks, three foreign banks and five rural commercial banks. The competition status of Chinese banking system is estimated via the two-step system GMM and the panel fixed effect technique. The empirical results of dynamic model and static model both indicate that Chinese banking system under monopolistic competition. As for Chinese SOCBs, JSCBs and CCBs, although both the three types of commercial banks are in monopolistic competitive market, the H-statistic of JSCBs is the largest, followed by SOCBS, whereas the competition among CCBs is the lowest. In terms of competition condition of Chinese banking industry over time, the H-statistic of Chinese banking system can see a downward trend from 2010 to 2017, which is the same as the results of 〖CR〗_4 and Herfindahl-Hirschman Index, as the high persistence of profits, low efficiency and deficiency capability of credit risk management.

Key words: Chinese Commercial banks, Chinese banking sector reform, Competition conditions, Panzar-Rosse Model, Concentration ratio, Herfindahl-Hirschman Index, GMM estimation, Panel fixed effect technique, Ownership, Period

Item Type: Dissertation (University of Nottingham only)
Keywords: Chinese Commercial banks, Chinese banking sector reform, Competition conditions, Panzar-Rosse Model, Concentration ratio, Herfindahl-Hirschman Index, GMM estimation, Panel fixed effect technique, Ownership, Period
Depositing User: Li, Chen
Date Deposited: 02 Dec 2022 09:45
Last Modified: 02 Dec 2022 09:45
URI: https://eprints.nottingham.ac.uk/id/eprint/57842

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