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The Effects of Public Listing on the Performance of Banks in China (Liu B.)

Bank Profitability Stability&Soundness

Abstract Chinese banks have been pushing further commercialization, corporate restructuring and public listing in recent years. The ten largest commercial banks in China have all been listed, among which nine went public in the past decade. This paper conducts an empirical investigation on how public listing affects the performance of Chinese banks. Particularly, we examine the pre-listing restructuring effect and the different effects of public listing locations such as Shanghai and Hong Kong, which have not received much attention in the literature. Our sample covers all the 16 listed banks in China and 17 other unlisted banks over the period of 1997-2008. Using a pooled cross-section regression, we compare three modified models built upon Berger et al. (2005) to consider the following three effects: 1) the static governance effect; 2) the selection effect and 3) the dynamic effect. We found that the public listing effect should be modeled as a dynamic process rather than a sudden structural change at a cut-off point, thus it is important to compare the banksperformance during the pre-listing restructuring period with the after-listing period. Moreover, the public listing in Hong Kong is found to have more positive and persistent effects on banksperformance in terms of both profitability and financial safety than the public listing in Mainland China. We also provide some tentative explanations for such different effects on banksperformance, and discuss the implications to both policy makers and market participants.
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Libref/ Liu B. (2011) "The Effects of Public Listing on the Performance of Banks in China", HKIMR Working Paper No. 07/2011, pp. 1 - 36
© Программирование — Александр Красильников, 2008
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