05156oam 22010814 450 991096180370332120250426110129.09786612843839978146239915414623991509781452704661145270466X9781282843837128284383497814518731771451873174(CKB)3170000000055323(EBL)1608399(SSID)ssj0001475058(PQKBManifestationID)11890019(PQKBTitleCode)TC0001475058(PQKBWorkID)11472632(PQKB)11475031(OCoLC)649487947(MiAaPQ)EBC1608399(IMF)WPIEE2009170(IMF)WPIEA2009170WPIEA2009170(EXLCZ)99317000000005532320020129d2009 uf 0engur|n|---|||||txtccrDoes Good Financial Performance Mean Good Financial Intermediation in China? /Tarhan Feyzioglu1st ed.Washington, D.C. :International Monetary Fund,2009.1 online resource (34 p.)IMF Working PapersDescription based upon print version of record.9781451917451 1451917457 Includes bibliographical references.Contents; I. Introduction and Summary; II. Financial Performance of Chinese Banks; III. Bank Efficiency; A. Modeling Bank Efficiency; B. Estimation and Results; IV. Explaining Profitability; V. Conclusions; ReferencesChinese banks generate large profits and have relatively low nonperforming loans. However, good financial performance does not, in itself, guarantee that banks efficiently intermediate the economy's financial resources. This paper first examines how efficient Chinese banks are in financial intermediation, using the stochastic production frontier approach. Quality of loans are controlled for by focusing on net loans and correcting for nonperforming loans; Hong Kong SAR banks are included in the sample to have a more universally representative production frontier. The results suggest that Chinese banks indeed became more efficient during 2001-07. Nevertheless, a majority of banks remain quite inefficient, including several large state owned banks and many city banks. Large banks tend to hoard deposits and operate beyond the point of diminishing returns to scale, while smaller banks operate at increasing returns to scale. This suggests that reallocating deposits from large to smaller banks would increase overall efficiency. The paper finds no significant correlation between bank efficiency and profitability. Possible factors leading to large profits in the banking system, despite wide-spread inefficiencies, are low deposit interest rates, large interest margins, and high market concentration. Moving to indirect monetary policy and deepening capital markets to channel some of the savings to productive investment would help improve the efficiency of financial intermediation. This may spur loan growth, however, which will need to be handled with monetary policy and regulatory/supervisory tools.IMF Working Papers; Working Paper ;No. 2009/170Banks and bankingChinaBank creditimfBankingimfBanks and BankingimfBanks and bankingimfBanksimfCommercial banksimfCreditimfDepository InstitutionsimfFinanceimfIndustries: Financial ServicesimfLoansimfMicro Finance InstitutionsimfMonetary economicsimfMonetary Policy, Central Banking, and the Supply of Money and Credit: GeneralimfMoney and Monetary PolicyimfMortgagesimfNonperforming loansimfChinaEconomic conditionsChina, People's Republic ofimfBanks and bankingBank creditBankingBanks and BankingBanks and bankingBanksCommercial banksCreditDepository InstitutionsFinanceIndustries: Financial ServicesLoansMicro Finance InstitutionsMonetary economicsMonetary Policy, Central Banking, and the Supply of Money and Credit: GeneralMoney and Monetary PolicyMortgagesNonperforming loans332.1;332.1/532;332.1532Feyzioglu Tarhan1168803International Monetary Fund.DcWaIMFBOOK9910961803703321Does Good Financial Performance Mean Good Financial Intermediation in China4371772UNINA