Bank ownership and performance in China: some further evidence

Abstract: China has recently completed an important part of the reform process of its banking system partially privatising its major Commercial banks with both domestic and foreign capital. This paper investigates the effect of different ownership structures to banks’ economic performance, using a panel data analysis of 57 banks over the 2000-2016 period. A specific focus will be given to the Big-Five Commercial banks and the role of foreign ownership. The main findings show that private domestic banks are the most efficient and profitable banks; on the opposite side, Policy banks are by far the least efficient and profitable banks; Big Five banks have instead closed the cost efficiency and Asset quality gap with the best performing private banks, while profitability findings remain mixed. Also, strategic minority foreign ownership in State-owned banks is found to be positively associated with bank performance.