재무연구 제 권 호 (2010년 5월)
Asian Review of Financial Research, Vol., No..
pp.477~503
pp.477~503
Effects of Competition and Ownership Structure on Chinese and Korean Banks’ Profitability
Sunghwan Kim School of Business Administration, Kyungpook National University
Xuguang Liu Graduate student, School of Business Administration, Kyungpook National University
Seongmin Jeon Graduate student, School of Business Administration, Kyungpook National University
Using a combined panel data of Chinese and Korean banks from 1991 to 2007, we study the effects of market structure and ownership structure of banks on their returns on assets. We focus, especially, on the effects of shares of government, the largest shareholder, and foreign shareholders of banks in the two countries. While the banking sector in Korea is more competitive and deregulated, the Chinese market is considered still in transition to a market-based system. We test such hypotheses that the banking sector in a market economy like Korea is more effective than that in the transitional economy like China in achieving higher profitability for their stakeholders, that the higher the governmental shares in banks such as most banks in China and the governmental banks in Korea, the less effective the banking sector is, and thus that banks controlled more by the government would be less profitable. Interestingly, we find that while banks owned by the government might be less effective in operation, banks with larger governmental shares in China perform better in terms of profitability and many other aspects, compared with Korean commercial banks, that banks with larger governmental and foreign ownership in Korea are less profitable but more effective, and that banks achieved higher profitability even with much higher wages per employee.
Sunghwan Kim
Xuguang Liu
Seongmin Jeon
Using a combined panel data of Chinese and Korean banks from 1991 to 2007, we study the effects of market structure and ownership structure of banks on their returns on assets. We focus, especially, on the effects of shares of government, the largest shareholder, and foreign shareholders of banks in the two countries. While the banking sector in Korea is more competitive and deregulated, the Chinese market is considered still in transition to a market-based system. We test such hypotheses that the banking sector in a market economy like Korea is more effective than that in the transitional economy like China in achieving higher profitability for their stakeholders, that the higher the governmental shares in banks such as most banks in China and the governmental banks in Korea, the less effective the banking sector is, and thus that banks controlled more by the government would be less profitable. Interestingly, we find that while banks owned by the government might be less effective in operation, banks with larger governmental shares in China perform better in terms of profitability and many other aspects, compared with Korean commercial banks, that banks with larger governmental and foreign ownership in Korea are less profitable but more effective, and that banks achieved higher profitability even with much higher wages per employee.
