Do different forms of government ownership matter for bank capital behaviour? Evidence from China

Chunxia Jiang (Corresponding Author), Hong Liu (Corresponding Author), Phil Molyneux (Corresponding Author)

Research output: Contribution to journal › Article

Abstract

This study attempts to reconcile the conflicting theoretical predictions regarding how government ownership affects bank capital behaviour. Using a unique Chinese bank dataset over 2006-2015 we find that government-owned banks have higher target capital ratios and adjust these ratios faster compared to private banks, supporting the ‘development/political’ view of the government’s role in banking. This effect is stronger for local government-owned and state enterprise-owned banks than for central government-owned banks. We also find that undercapitalized government-owned banks increase equity while undercapitalized foreign banks contract assets and liabilities as their respective main strategy to adjust their capital ratios.
Original languageEnglish
Pages (from-to)38-49
Number of pages11
JournalJournal of Financial Stability
Volume40
Early online date28 Nov 2018
DOIs
Publication statusPublished - Feb 2019

Fingerprint

Bank capital
China
Government ownership
Government
Capital ratios
Banking
Liability
Prediction
Political development
Assets
State-owned enterprises
Central government
Equity
Foreign banks
Local government

Keywords

  • banking
  • capital
  • adjustment speed
  • government ownership
  • China
  • Government ownership
  • Adjustment speed
  • Banking
  • Capital

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)
  • Finance

Cite this

Do different forms of government ownership matter for bank capital behaviour? Evidence from China. / Jiang, Chunxia (Corresponding Author); Liu, Hong (Corresponding Author); Molyneux, Phil (Corresponding Author).

In: Journal of Financial Stability, Vol. 40, 02.2019, p. 38-49.

Research output: Contribution to journal › Article

Jiang, C, Liu, H & Molyneux, P 2019, 'Do different forms of government ownership matter for bank capital behaviour? Evidence from China' Journal of Financial Stability, vol. 40, pp. 38-49. https://doi.org/10.1016/j.jfs.2018.11.005
Jiang C, Liu H, Molyneux P. Do different forms of government ownership matter for bank capital behaviour? Evidence from China. Journal of Financial Stability. 2019 Feb;40:38-49. https://doi.org/10.1016/j.jfs.2018.11.005
Jiang, Chunxia ; Liu, Hong ; Molyneux, Phil. / Do different forms of government ownership matter for bank capital behaviour? Evidence from China. In: Journal of Financial Stability. 2019 ; Vol. 40. pp. 38-49.
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