The Impact of Local Economic Growth on Bank Profits Efficiency: Evidence from City Commercial Banks in China

Posted: 20 Sep 2011

See all articles by Jianjun Sun

Jianjun Sun

College of Tourism, Hainan University

Nobuyoshi Yamori

Kobe University - Research Institute for Economics & Business Administration

Date Written: September, 16 2011

Abstract

Chinese city commercial banks are well-suited for exploring the impact of local economic growth on bank performance. We find that local economic growth has a negative impact on profits efficiency of city commercial bank. Moreover, the magnitude of the impact is very large. The findings suggest that a moderate decline in local economic growth may increase significantly the banking performance. The nexus between the control system of local officials and internal governance structure of city commercial banks in China may explain the results. Our study contributes to thin literature on relationship between local economic growth and bank performance.

Keywords: Profits efficiency, Local economic growth, City commercial banks

JEL Classification: G21, O43, H7

Suggested Citation

Sun, Jianjun and Yamori, Nobuyoshi, The Impact of Local Economic Growth on Bank Profits Efficiency: Evidence from City Commercial Banks in China (September, 16 2011). Available at SSRN: https://ssrn.com/abstract=1929026 or http://dx.doi.org/10.2139/ssrn.1929026

Jianjun Sun (Contact Author)

College of Tourism, Hainan University ( email )

58 Renmin Ave. Meilan District
Haikou, Hainan 570228
China

Nobuyoshi Yamori

Kobe University - Research Institute for Economics & Business Administration ( email )

2-1, Rokkodai cho
Nada-ku
Kobe, 657-8501
Japan

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