Download or read book Does Bank Ownership Imply Efficient Monitoring Evidence from Bank Lending and Firm Investment Efficiencies in China written by Xiaofei Pan and published by . This book was released on 2016 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates the effect of bank ownership on lending and firm investment efficiencies to give reasons for the mixed evidence that exists on the impact of bank ownership on firm performance. Using China's listed firms as an example, we find that bank ownership reduces the efficiency of bank lending and harms investment efficiency for state-owned enterprises (SOEs), while simultaneously relating to optimal lending decisions and enhanced investment efficiency for non-SOEs. Our findings suggest that banks monitor non-SOEs effectively, but are less effective at monitoring SOEs. We document that banks' ex post monitoring on non-SOEs' investment policy results from their more effective ex ante monitoring of their lending decisions. Further analysis suggests that bank ownership hurts firm performance for SOEs while enhancing firm performance for non-SOEs. Overall, we document that in an emerging market where SOEs and non-SOEs co-exist, bank ownership affects firm performance by influencing the lending decision and firm investment policy, while the effectiveness of their monitoring varies with the firm's ownership structure.
Download or read book Does Banks Dual Holding Affect Bank Lending and Firm Investment Decisions Evidence from China written by Xiaofei Pan and published by . This book was released on 2014 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates the effect of banks' dual holding on bank lending and firms' investment decisions using a sample of listed firms in China. We find that dual holding leads to easier access to bank loans, a result that is more pronounced for non-state-owned enterprises (non-SOEs) than SOEs. We also find that dual holding distorts banks' lending decisions and harms the investment efficiency for SOEs, while resulting in optimal lending decisions and enhanced investment efficiency for non-SOEs. For non-SOEs, further analysis suggests that optimal lending decisions and efficient investment can be achieved for firms with higher ownership concentration, and firms in which the family and foreign investors are the controlling shareholders. We argue that, in emerging markets, whether a bank plays a monitoring role by directly holding the debt and equity claims of companies relies heavily on whether the potential collusion between firm executives and bank managers can be averted, which in turn is determined by the firms' governance framework and ownership structure.
Download or read book Conditional Conservatism and Investment Efficiency Under a State Ownership Environment written by Sun Liu and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Prior studies on developed markets have documented that conditional conservatism is positively associated with investment efficiency. In this study, we investigate whether this association can be shaped by the unique institutional environment--state ownership of firms and banks--in China. First, we examine the association between conditional conservatism and investment efficiency in China's unique corporate setting and find that conditional conservatism can reduce (facilitate) investment in listed firm settings in which overinvestment (underinvestment) is most likely, and thereby improve investment efficiency. Further analyses reveal that the effects of conditional conservatism on improving investment efficiency are less pronounced in state-owned enterprises (SOEs) and firms with higher fractions of loans borrowed from state-owned commercial banks. Moreover, we find that these effects have become more pronounced in non-SOEs than in SOEs after the implementation of the stimulus program in 2008, which results in a large increase in bank borrowing by Chinese firms. Overall, this study provides new evidence on how the effects of conditional conservatism on investment efficiency can be shaped by concentrated state ownership and politically driven lending in China.
Download or read book Financing Energy Efficiency written by Robert P. Taylor and published by World Bank Publications. This book was released on 2008-02-08 with total page 306 pages. Available in PDF, EPUB and Kindle. Book excerpt: While energy efficiency projects could partly meet new energy demand more cheaply than new supplies, weak economic institutions in developing and transitional economies impede developing and financing energy efficiency retrofits. This book analyzes these difficulties, suggests a 3-part model for projectizing and financing energy efficiency retrofits, and presents thirteen case studies to illustrate the issues and principles involved.
Download or read book Banks as Corporate Monitors written by Qing He and published by . This book was released on 2017 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the governance role of banks in replacement of underperforming CEOs in firms listed on Chinese stock exchanges. Under most circumstances, the findings suggest that the presence of outstanding loans does not increase the probability that a poorly performing CEO will be forced out and replaced. However, there is a positive and significant effect if the under-performing firm relies heavily on secured and short-term bank lending. Bank loans increase the likelihood of a forced CEO turnover in private firms, especially where joint-equity banks serve as the main lenders to the firm. There is no similar increase in the probability of a CEO turnover for state-owned firms or firms that borrow mainly from state-owned banks. Thus, where state ownership of banks and listed firms implies inefficiency or reluctance on monitoring borrower performance, there is an opportunity to improve loan contract arrangements to improve the monitoring role of lending banks.
Download or read book State Ownership Bank Loans and Corporate Investment written by Yeqin Zeng and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the effect of bank loans on Chinese publicly listed firms' investment decisions based on the underinvestment and overinvestment theories of leverage. Evidence from China is of particular importance because China is the world's largest emerging and transitional economy. At first we show that there is a negative relationship between bank loan ratios and investment for Chinese publicly listed firms. And this negative relationship is much stronger for firms with low growth than firms with high growth. Secondly, we find that both short-term and long-term loan ratios are negatively correlated with investment. However, the higher the long-term loan ratios are, the weaker the negative relationship between long-term loan ratios and investment is. Thirdly, firm ownership only matters to the effect of short-term bank loans on investment in our sample. That is, the negative relationship between short-term loan ratios and investment is weaker for SOEs than for non-SOEs. Lastly, we show that the reform of China's banking system in 2003 has not strengthened the negative relationship between bank loans and investment. Our findings suggest that although Chinese state-owned banks are severely intervened by government policies, they still have a disciplining role on firms' investment, especially in firms with low growth.
Download or read book Bank Ownership Structure Bank Regulation and Firm Investment written by Ying Zheng and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: For banks, good governances can reduce both the abilities and incentives of insiders to expropriate bank resources and promote bank efficiency, and are supposed to have real economic effect on their customers and firms in that country. This study examines how banking sector's ownership structure is related to the firm-level investment efficiency on a sample of 88,764 firm-year observations across 36 developed and developing countries between 1995 and 2006. I find that, ceteris paribus, a country's banking sector with more cash flow rights by controlling owners improves firms' investment efficiency; whereas, a country's banking sector with larger divergence between cash flow rights and control rights by controlling owners reduces firms' investment efficiency.
Download or read book Rethinking Bank Regulation written by James R. Barth and published by Cambridge University Press. This book was released on 2008-05-12 with total page 446 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume presents a new database on bank regulation in over 150 countries. It offers a comprehensive cross-country assessment of the impact of bank regulation on the operation of banks and assesses the validity of the Basel Committee's influential approach to bank regulation.
Download or read book Conceptualizing the Regulatory Thicket written by Shen Wei and published by Routledge. This book was released on 2020-10-18 with total page 279 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book examines the regulatory framework, regulatory objectives, regulatory logics, regulatory instruments, regulatory failures, and regulatory responses in China’s financial market after the global financial crisis. The book provides an in-depth analysis of China’s contemporary financial regulatory system, focusing on risks, regulation, and policies in practice. By drawing on public and private interest theories relating to financial regulation, the book contends that the controlled development of the banking sector, and the financial sector generally, has transformed China’s banks into more market-oriented institutions and increased public sector growth. However, China’s financial market and financial regulation have some inherent weaknesses and deficiencies. This book also offers insights into how this can be improved or adapted to minimize systemic risks in China’s financial sector. This book tries to prove that financial regulation is not just a vehicle for maintaining efficient financial markets but a primary tool through which the Chinese government achieves its political and economic objectives. More fundamentally, according to the law and finance theory, strong market and vibrant judicial systems are needed to further modernize China’s financial markets and market economy. The book will be a useful reference for anyone interested in learning from the Chinese experience.
Download or read book The Relationship Between Ownership Structure and Investment Efficiency in China Funding on SOEs and Foreign Owned Enterprises written by KAIYUE SUN and published by . This book was released on 2014 with total page 86 pages. Available in PDF, EPUB and Kindle. Book excerpt: China owes much of its great economic achievement to its investment-and-export led growth model. This study analyzes the impact of ownership structure on firms' investment efficiency. Using a firm-level dataset drawn from the World Bank's Enterprises Survey, the study finds that ownership structure contributes to firms' investment efficiency. State owned enterprises, in general, are less profitable than their domestic private and foreign owned competitors. Foreign owned enterprises face critical challenges due to economic distortions. The study also finds that, despite significant differences across ownership classifications, firm sector, size, management experience, employees training program and business obstacles also have an impact on firms' investment efficiency. Results of this analysis have important policy implications for the ongoing economic reforms in China.
Download or read book Leverage and Investment Under a State Owned Bank Lending Environment written by Michael Firth and published by . This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the relations between leverage and investment in China's listed firms, where corporate debt is principally provided by state-owned banks. We obtain three major findings. First, there is a negative relation between leverage and investment. Second, the negative relation between leverage and investment is weaker in firms with low growth opportunities and poor operating performance than in firms with high growth opportunities and good operating performance. Third, the negative relation between leverage and investment is weaker in firms with a higher level of state shareholding than in firms with a lower level of state shareholding. Overall, our results are consistent with the hypothesis that the state-owned banks in China impose fewer restrictions on the capital expenditures of low growth and poorly performing firms and also firms with greater state ownership. This creates an over-investment bias in these firms.
Download or read book Regulating China s Shadow Banks written by Qingmin Yan and published by Routledge. This book was released on 2015-12-14 with total page 274 pages. Available in PDF, EPUB and Kindle. Book excerpt: China’s shadow banking has been a top issue in the past few years. Scholars, policymakers, and professionals around the world are seeking deeper insight into the subject, and the authors had unique insight into the sector through their positions high up in the regulatory apparatus. "Regulating China’s Shadow Banks" focuses on the regulation of shadow banks in China and provides crucial information to demystify China’s shadow banking and associated regulatory challenges. This book defines "shadow banking" in the Chinese context, analyzes the impact of shadow banking on the Chinese economy, includes a full-scale analysis on the current status of Chinese financial regulation, and provides valuable advice on the regulation of China’s shadow banks.
Download or read book State Common Ownership and Bank Governance written by Qing He and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using hand-collected data of bank loans and CEO turnovers in China, we investigate whether common ownership compromises creditors' governance role when borrowers underperform. Unlike prior literature on the overall lack of bank monitoring on state-owned enterprises (SOEs) in China, we argue that such governance inefficiency exists only among the lending relationships where the bank and the firm are ultimately owned by the same government agency (i.e., state common ownership). The effects are greater for the firms with a board director from the lending bank, with ownership in the bank's shares, and with political connections. Overall, this paper revisits the functions of state-owned business groups in emerging markets.
Download or read book Ownership Institutions and Capital Structure written by Kai Li and published by . This book was released on 2015 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We employ a unique data set to explore the role of ownership structure and institutional development in debt financing of non-publicly traded Chinese firms. We show that state ownership is positively associated with leverage and firms' access to long-term debt, while foreign ownership is negatively associated with all measures of leverage. Surprisingly, firms in better developed regions are associated with reduced access to long-term debt, suggesting the availability of alternative financing channels and the tightening of the lending standards under the on-going banking reform. The combination of ownership structures and institutions explains up to six percent of the total variation in firms' leverage decisions, while firm characteristics alone explain no more than eight percent of the variation. Finally, we show that the negative effect of institutional development on firms' access to long-term debt is mitigated when the level of state or foreign ownership is high, and state ownership plays no role in foreign-controlled firms' access to long-term debt while its positive effect on access to long-term debt is strengthened for firms in well developed regions. Our evidence is consistent with state-owned banks' incentives to grant long-term loans only to state-owned firms in the absence of well-developed risk management.
Download or read book Shadow Banking in China written by Shen Wei and published by Edward Elgar Publishing. This book was released on 2016-07-27 with total page 470 pages. Available in PDF, EPUB and Kindle. Book excerpt: This timely book investigates the dynamic causes, key forms, potential risks and changing regulation of shadow banking in China. Topics discussed include P2P lending, wealth management products, local government debts, and the underground lending market. Taking policy considerations into account, the author provides a comprehensive analysis of the regulatory instruments tackling the systemic risks in relation to China's shadow banking sector. Central bank's role, interest rate formation mechanism, exchange rate reform and further deepening reform of the regulatory regime and financial markets are also thoroughly discussed in the context of China's continuing financial reform.
Download or read book The Rise of Foreign Investment in China s Banks written by Lamin Leigh and published by . This book was released on 2006 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: The recent wave of foreign investment in China's banks and the prospects of further opening of the banking sector under the WTO agreement suggest that foreign banks are likely to play an increasingly important role in China. This paper takes stock of the involvement of foreign banks in the Chinese banking sector in the perspective of international experience. While in most other countries foreign bank entry took the form of direct takeover or majority shareholding, foreign investments in China's banks have been minority shareholdings with very limited management involvement. The paper concludes that China appears to be well positioned to benefit from further opening of the banking sector to foreign investors. International experience suggests that greater competition from and participation of foreign banks can in general bring important benefits if appropriate incentives and sufficient opportunities are created
Download or read book What Causes Chinese Listed Firms to Switch Bank written by Jiayi Huang and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyses the duration of firm-bank relationships and examines what drives firms in China to change from one bank loan provider to another. Matched data of firm-loan-duration to bank provides a unique panel data set of relationship between China's listed firms and their lending banks consisting of 2,102 firms listed on both the Shanghai Stock Exchange and Shenzhen Stock Exchange in the period of 1996-2016. The Cox proportional hazard model is used to allow for a semiparametric hazard function after parametrically controlling for firmspecific financial factors, industry factors, ownership characteristics, internal management changes, and external macroeconomic changes. In addition, we explore the impact of the 2008 financial crisis, bank-financial and ownership characteristics. The main finding of this study is that in an environment of growing commercialisation of relationships the firm-bank relationship between state-owned enterprises (SOEs) and state-owned banks (SOBs) in China remains super-stable. However, a change in the CEO of a firm even of a SOE increases the probability of the loan-provider being changed.
