Abstract
In this study, a sample of 116 Chinese domestic banks, comprising state-owned banks (SOBs), joint-stock banks (JSBs), city commercial banks(CCBs) and credit cooperatives, is used to investigate the interest margins of China’s banking industry. The results indicate that the credit risk is the major factor in enhancing the profitability of the Chinese domestic banks. On the other hand, the banks require high interest margins to compensate for the liquid, default and credit risk exposures. Following the liberalization of the banking industry, domestic banks do not hold as many liquid assets and loan loss provisions as before.
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Notes
- 1.
The Herfindahl-Hirschman Indices after 2001 are below 1000. According to regulation of the American Department of Justice (1992), it can be classified as a high competitive market.
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Qi, M., Zhang, J. (2018). What Determines Interest Margins? The Case of Chinese Banks. In: García-Olalla, M., Clifton, J. (eds) Contemporary Issues in Banking. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-90294-4_11
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DOI: https://doi.org/10.1007/978-3-319-90294-4_11
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