Journal
ECONOMIC SYSTEMS
Volume 40, Issue 4, Pages 539-551Publisher
ELSEVIER
DOI: 10.1016/j.ecosys.2016.01.003
Keywords
Banking marketization; Institutional quality; Bank stability; China
Categories
Funding
- National Natural Science Foundation of China [71473189]
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This paper investigates the relationship between banking marketization and bank stability across different levels of institutional quality in China. Our results suggest that banking marketization does not inevitably have a negative impact on bank stability. One of the two banking marketization indicators, namely the proportion of deposits taken by non-stateowned commercial banks to total deposits, has a significant positive impact on bank stability; in contrast, the other indicator, the proportion of loans issued to non-state-owned hybrid-sector firms to total loans in China's banking sector, is negatively associated with bank stability. Furthermore, an improvement of the institutional quality can reduce the adverse influence of banking marketization on bank stability on the whole. (C) 2016 Elsevier B.V. All rights reserved.
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