Rational inefficiency and non-performing loans in Chinese banking: a non-parametric bootstrapping approach

Matthews, Kent ORCID: https://orcid.org/0000-0001-6968-3098, Guo, Jianguang and Zhang, Nina 2007. Rational inefficiency and non-performing loans in Chinese banking: a non-parametric bootstrapping approach. [Working Paper]. Cardiff Economics Working Papers, Cardiff: Cardiff University.

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Abstract

The existing Chinese banking system was born out of a state-planning framework focussed on the funding of state-owned enterprises. Despite the development of a modern banking system, numerous studies of Chinese banking point to its high level of average inefficiency. Much of this inefficiency relates to the high level of non-performing loans held on the banks books. This study argues that a significant component of inefficiency relates to a defunct bureaucratic incentive structure. Using bootstrap non-parametric techniques the paper decomposes cost-inefficiency into X-inefficiency and rational inefficiency caused by bureaucratic rent seeking. In contrast to other studies of the Chinese banking sector, the paper argues that a change in the incentive structure and the competitive threat of the opening up of the banking market in 2007 has produced reduced inefficiency and improved performance.

Item Type:	Monograph (Working Paper)
Date Type:	Publication
Status:	Published
Schools:	Schools > Business (Including Economics)
Subjects:	H Social Sciences > HB Economic Theory
Publisher:	Cardiff University
Date of First Compliant Deposit:	30 March 2016
Last Modified:	28 Oct 2022 10:18
URI:	https://orca.cardiff.ac.uk/id/eprint/77754

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