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The Impact of Income Diversification on Chinese Banks: Bank Efficiency

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Income Diversification in the Chinese Banking Industry: Challenges and Opportunities

Abstract

This chapter examines the efficiency of the Chinese banking sector in relation to banks’ diversification operations. In a two-step approach, the chapter first calculates both cost and profit efficiency scores via stochastic frontier analysis using the method of within maximum likelihood estimation (WMLE). Then, the investigation employs a dynamic Tobit model in order to shed light on the diversification-efficiency nexus in the Chinese banking market.

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Notes

  1. 1.

    As the small sample size might result in an incidental parameters problem, this book also applies a robustness test by using dummy variables to catalogue the three sub-groups. The robustness test results are reported in the Appendix.

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  1. China Construction Bank, Beijing, China

    Zhixian Qu

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Qu, Z. (2020). The Impact of Income Diversification on Chinese Banks: Bank Efficiency. In: Income Diversification in the Chinese Banking Industry: Challenges and Opportunities. Springer, Singapore. https://doi.org/10.1007/978-981-15-5890-0_5

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