Bank ownership reform and bank performance in China

Using a panel of Chinese banks over the 1997-2004 period, we assess the effect of bank ownership on performance. Specifically, we conduct a joint analysis of the static, selection. and dynamic effects of (domestic) private, foreign and state ownership. We find that the Big Four state-owned commercial banks are less profitable, are less efficient, and have worse asset quality than other types of banks except the policy banks (static effect). Further, the banks undergoing a foreign acquisition or public listing record better pre-event performance (selection effect); however, we find little performance change in either the short or the long term. (C) 2007 Elsevier B.V. All rights reserved.