آیا ببرهای جدید جایگزین ماموت های قدیمی در سیستم بانکی چین می شود؟ مدارک و شواهد از یک نمونه از بانک های تجاری شهری
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|18287||2009||10 صفحه PDF||سفارش دهید||محاسبه نشده|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of Banking & Finance, Volume 33, Issue 1, January 2009, Pages 131–140
“New Tigers” (including city commercial banks) outperform state-owned commercial banks burdened with non-performing loans from unprofitable state-owned enterprises. We study whether this is solely due to superior corporate governance (multiple shareholders versus total government ownership) or also to the favorable environment (the New Tigers target affluent China, while state-owned commercial banks operate nationwide). Using a field survey on 20 city commercial banks from three provinces at different levels of economic development, we find better performance at those in the East and worse performance at those controlled by state-owned enterprises. Geography and policy do matter, and reform of state-owned commercial banks is necessary to bring better banking to China.
Why are there banking problems in China, an economy that has been growing at an average rate of 9% over the last 25 years? Usually, we expect banking problems to emerge when a country’s entire economy is gripped by a crisis, and so the Chinese case seems puzzling. In reality, the puzzle is only apparent, not real. To grasp this, we need to recall the special features of China’s transition. This will help us understand how the combination of strong economic growth and a weak banking system are not contradictory but the natural outcome of policy choices. In contrast with most ex-centrally planned economies and well before the others followed their “shock therapy” to the market, China opted for a gradual transition strategy. As most economists now concur, this choice was far-sighted because it: (i) avoided the acute strains generated by the abrupt dismantlement of state enterprises (e.g. mass unemployment and destructive disruption of production) and (ii) allowed some institution-building before the privatization of key sectors of the economy, without which China risked moving from the problems of state ownership to those of private monopoly (Stiglitz, 2002, Black and Tarassova, 2003 and Lau et al., 2000). The gradual transition allowed China to keep its robust growth while rooting the new domestic private economy (now accounting for more than 75% of GDP) in international production networks. Nevertheless, there was a darker side of the story: State-owned enterprises (SOEs) outlived the planned economy, thanks to the gradual transition, and kept making large losses (Opper, 2001). The four big state-owned commercial banks (SOCBs) absorbed the bulk of those losses. The unhealthy link between SOEs and SOCBs is among the chief worries concerning the future of China’s economic miracle. In this respect, we show that China’s banking system is not monolithic: alongside the problematic “Old Mammoths” (as we dub the SOCBs), a breed of dynamic “New Tigers” (banks organized as companies limited by shares) is rapidly emerging. These banks show much better performance, possibly because the state was not their single shareholder as with the SOCBs. We conclude that even the New Tigers will not be able by themselves to solve China’s banking problem. As we will show, part of their success seems due not so much to their better corporate governance, as to the fact that their business is concentrated in the Eastern belt, the most developed area of China. Thus, solving China’s banking problem means dealing with the SOCBs. Although the Chinese authorities have taken steps to tackle the issue, the outlook is still rather murky.1 The rest of this paper is organized as follows. In Section 2 we review the negative impact of state ownership on the corporate governance of banks, with a specific focus on China. Then, we provide details on the rapid growth of the New Tigers, the new breed of banks, and ask whether they offer China an option to grow out of its banking problem. In this respect, we posit that an accurate answer requires distinguishing between the impact of better governance (contrary to the SOCBs, the New Tigers were not wholly state-owned) and that of the fact that, unlike the SOCBs, their business lies prevalently in the most developed area of China. Section 3 sheds light on this issue. We report the results of a field survey that offers evidence on the extent to which the performance of the New Tigers differs depending on the level of economic development of the geographical area where banks do business. This is exactly the rationale for looking at city commercial banks (CCBs), a vibrant segment of the New Tigers, as these are banks operating widely across the country. By focusing on 20 CCBs located in three provinces of China at different levels of economic development, we hope to keep corporate governance (relatively) constant and thus be able to ascribe any significant difference in performance across provinces to their relative underlying prosperity. After describing the structure of the survey, we report our main econometric results. They confirm that CCB performance is systematically and positively related to the level of economic development in the provinces in which they are located. Furthermore, the richness of the information obtained allows us to gain additional insight into other factors affecting bank performance in China. Section 4 summarizes our main findings and briefly discusses policy implications.
نتیجه گیری انگلیسی
We have delved into the banking system’s manifest problems, which possibly put the continuation of the Chinese economic miracle at risk. We have argued that the weakness of the banking system in a country that has recorded average annual growth of around 9% over 25 years is only an apparent puzzle, and that the crux of the banking problem lies in the unhealthy link between loss-making state-owned enterprises and state-owned commercial banks, the “Old Mammoths” that still dominate banking in China. We have posited that this link did not materialize by chance but, rather, was the negative side of the policy choice for gradual transition, which left unprofitable state-owned enterprises in business while, due to political interference, state-owned commercial banks could not stop lending to them and, later, had to bear the losses created by their inefficient operations. Next, we have discussed how to bring better banking to China. In particular, we asked whether the emergence of a new breed of dynamic banks (the “New Tigers”; banks formed as companies limited by shares, including city commercial banks) can be the answer. We have provided details on the growth of the New Tigers, comparing their performance with that of the Old Mammoths. We have considered whether the New Tigers offer China an option to “growing out” of its banking problem. Although extrapolating the New Tigers’ growth might suggest that they are rapidly supplanting the Old Mammoths, we posited that an accurate answer requires carefully evaluating the sources of the New Tigers’ better performance. Specifically, we need to understand whether this is simply caused by better corporate governance or whether – and to what extent – the New Tigers are better simply because they do business in the most developed area of the country. To address this, we drew on the results of a field survey to check whether the performance of the New Tigers differs according to the level of development of their area of operation. This was precisely the rationale behind looking at city commercial banks, a vibrant segment within the New Tigers, which include banks operating throughout the whole of the country. By focusing on 20 city commercial banks located in three provinces with differing levels of development, we kept corporate governance (relatively) constant and could thus ascribe any significant difference in performance across provinces to their relative underlying prosperity. The results show that these banks’ performance was systematically and positively related to the level of economic prosperity in their provinces. The main result of our econometric analysis implies that the New Tigers may be unable by themselves to bring better banking to the whole of the country. This suggests that the authorities are right to stress the need to restructure and rehabilitate the Old Mammoths. While the authorities’ push to transform the state-owned commercial banks into companies limited by shares goes in the right direction, it is not clear that stock-exchange listing can really, per se, improve these banks’ corporate governance. Given their size and considering that the government could continue to be the largest shareholder, doubts are legitimate. Perhaps, as suggested by Huang (2002), it would be advisable for China’s authorities to consider breaking up their Old Mammoths. Together with stock-exchange listing, this would help streamline the Old Mammoths and could also facilitate the introduction of foreign strategic investors, thus contributing to improve their governance.