Financial ratio analysis and the determinants of Chinese commercial banks' profitability
The development of the banking sector plays a critical role in serving the real economy of a country. Since China has become the second-largest economy in worldwide since 2010, it is important for regulators, supervisors as well as the public to learn about the current performance of the Chinese ban...
| Main Author: | |
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| Format: | Dissertation (University of Nottingham only) |
| Language: | English |
| Published: |
2019
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| Online Access: | https://eprints.nottingham.ac.uk/57465/ |
| _version_ | 1848799478689038336 |
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| author | Wang, Yumeng |
| author_facet | Wang, Yumeng |
| author_sort | Wang, Yumeng |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | The development of the banking sector plays a critical role in serving the real economy of a country. Since China has become the second-largest economy in worldwide since 2010, it is important for regulators, supervisors as well as the public to learn about the current performance of the Chinese banking industry, including strengthens, shortcomings as well as potentials.
First of all, the line charts have been used in this paper to capture changes of the Chinese commercial banks from 2013 to 2018 in terms of an average value of financial ratios from different aspects. Then, the two-step system GMM estimation will be developed to investigate the important determinants which influence the profitability of the Chinese banks. This estimation is based on two-panel data of 64 and 60 Chinese commercial banks respectively from 2013 through 2018, followed by the discussion about how these variables affect profitability for different sizes of banks in China and some suggestions about improving performance.
The results of the dynamic analysis show that since the profitability of Chinese banks slowed their growth, there was a significant improvement of Chinese banks' performance during this period utilizing bank size, efficiency, capital adequacy, assets quality, liquidity, risk-taking ability as well as banks' non-traditional activity. In two-step system GMM, this study shows a positive correlation between L. ROAE, NIIR, ZSCORE, GDPGR, INF and banks’ profitability and a negative correlation between COSTI, EQTA, LODEP, LLRGL and banks’ profitability, and no huge differences between large sample banks and relatively small sample banks.
It is concluded that rise profits of commercial banks could be related to the improvement of efficiency, risk-taking ability, banks' non-traditional activity as well as a stable macroeconomic environment. At the same time, banks should pay attention to the number of loans, loan loss reserves, and capital holding because it would drop the profits growth of Chinese banks.
Keywords: financial ratios, Chinese commercial banks, system GMM analysis |
| first_indexed | 2025-11-14T20:36:18Z |
| format | Dissertation (University of Nottingham only) |
| id | nottingham-57465 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-14T20:36:18Z |
| publishDate | 2019 |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-574652022-11-30T11:55:02Z https://eprints.nottingham.ac.uk/57465/ Financial ratio analysis and the determinants of Chinese commercial banks' profitability Wang, Yumeng The development of the banking sector plays a critical role in serving the real economy of a country. Since China has become the second-largest economy in worldwide since 2010, it is important for regulators, supervisors as well as the public to learn about the current performance of the Chinese banking industry, including strengthens, shortcomings as well as potentials. First of all, the line charts have been used in this paper to capture changes of the Chinese commercial banks from 2013 to 2018 in terms of an average value of financial ratios from different aspects. Then, the two-step system GMM estimation will be developed to investigate the important determinants which influence the profitability of the Chinese banks. This estimation is based on two-panel data of 64 and 60 Chinese commercial banks respectively from 2013 through 2018, followed by the discussion about how these variables affect profitability for different sizes of banks in China and some suggestions about improving performance. The results of the dynamic analysis show that since the profitability of Chinese banks slowed their growth, there was a significant improvement of Chinese banks' performance during this period utilizing bank size, efficiency, capital adequacy, assets quality, liquidity, risk-taking ability as well as banks' non-traditional activity. In two-step system GMM, this study shows a positive correlation between L. ROAE, NIIR, ZSCORE, GDPGR, INF and banks’ profitability and a negative correlation between COSTI, EQTA, LODEP, LLRGL and banks’ profitability, and no huge differences between large sample banks and relatively small sample banks. It is concluded that rise profits of commercial banks could be related to the improvement of efficiency, risk-taking ability, banks' non-traditional activity as well as a stable macroeconomic environment. At the same time, banks should pay attention to the number of loans, loan loss reserves, and capital holding because it would drop the profits growth of Chinese banks. Keywords: financial ratios, Chinese commercial banks, system GMM analysis 2019-12-01 Dissertation (University of Nottingham only) NonPeerReviewed application/pdf en https://eprints.nottingham.ac.uk/57465/1/Yumeng%20Wang%2014317899.docx Wang, Yumeng (2019) Financial ratio analysis and the determinants of Chinese commercial banks' profitability. [Dissertation (University of Nottingham only)] financial ratios Chinese commercial banks system GMM analysis |
| spellingShingle | financial ratios Chinese commercial banks system GMM analysis Wang, Yumeng Financial ratio analysis and the determinants of Chinese commercial banks' profitability |
| title | Financial ratio analysis and the determinants of Chinese commercial banks' profitability |
| title_full | Financial ratio analysis and the determinants of Chinese commercial banks' profitability |
| title_fullStr | Financial ratio analysis and the determinants of Chinese commercial banks' profitability |
| title_full_unstemmed | Financial ratio analysis and the determinants of Chinese commercial banks' profitability |
| title_short | Financial ratio analysis and the determinants of Chinese commercial banks' profitability |
| title_sort | financial ratio analysis and the determinants of chinese commercial banks' profitability |
| topic | financial ratios Chinese commercial banks system GMM analysis |
| url | https://eprints.nottingham.ac.uk/57465/ |