Nonperforming loans and productivity in Chinese Banks, 1997-2006

Kent Matthews, Xu Zhang, Jianguang Guo

Research output: Journal PublicationArticlepeer-review

23 Citations (Scopus)

Abstract

A bootstrap method for Malmquist index estimates of productivity growth is constructed with appropriate confidence intervals. This paper adjusts for the quality of the output by accounting for the nonperforming loans (NPLs) on balance sheets and tests the robustness of the results by examining alternative sets of outputs. The productivity growth of state-owned banks and joint-stock banks is compared, and the determinants are evaluated. It was found that the average productivity of Chinese banks improved modestly over this period. Adjusting for the quality of loans by treating NPLs as an undesirable output, the average productivity growth of the state-owned banks was zero or negative, while the productivity of the joint-stock banks was markedly higher.

Original languageEnglish
Pages (from-to)30-47
Number of pages18
JournalChinese Economy
Volume42
Issue number2
DOIs
Publication statusPublished - 1 Mar 2009
Externally publishedYes

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (all)

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