A Study on CRM Implementation in Chinese Commercial Banks

The paper first presents the theory of Customer Relationship Management (CRM) under E-commerce circumstances. It then focuses on the motives and obstructions in implementing CRM in Chinese commercial banks. Further, the paper puts forward a trial solution to these specific problems to be a solving aid to Chinese commercial banks under Customer Relationship Management

Stability and Profitability in the Chinese Banking Industry: evidence from an auto-regressive-distributed linear specification

The important role played by the Chinese commercial banks in the development of China’s economy makes the government and banking regulatory authority give great concern about the performance of Chinese commercial banks, while the stability in the banking sector, without any doubt, has attracted greater attention since the financial crisis during 2007 and 2009. The principal objective of this study is to investigate the inter-relationships between profitability and stability in the Chinese banking industry. Using a sample of Chinese commercial banks over the period 2003-2013, the current study examines the inter-relationships under an auto-regressive-distributed linear model. With regard to the measurement of stability, both Z-score and stability inefficiency were used, while Return on Assets (ROA) was used as the indicator of profitability. In terms of the econometric methods, the current study used different types of Generalized Method of Moments (GMM) estimators including difference GMM, one-step system GMM, two-step system GMM as well as two-step robust GMM. In order to the check the robustness of the results, alternative econometric techniques were used such as ordinary least square (OLS) estimator, between effect estimator as well as fixed effect estimator. The results show that higher insolvency risk/lower bank stability leads to higher profitability of Chinese commercial banks and also that higher profitability leads to higher bank fragility

Development Strategy of Wealthy Customers in Chinese Commercial Banks

Wealth management business is an old and young business. In terms of wealth management, it begins from the social class when wealth allocation becomes divided. Wealth management in modern sense originated in Napoleon Era in France. Napoleon gave his wealth to bankers of Switzerland to manage, which opened a precedent for wealth management. As far as Chinese commercial banks are concerned, wealth management business provides services to help wealthy customers realize the value of their assets. This paper reviews current situations of wealth management business in Chinese commercial banks and investigates customer development strategy

Risk Analysis of Shanghai Inter-Bank Offered Rate - A GARCH-VaR Approach

The inter-bank offered rate widely used by Chinese commercial banks is Shanghai Inter-Bank Offered Rate (Shibor). Shibor has experienced significant development since it was created. It offers different products by duration. Despite its importance in China’s financial market, Shibor’s risk has largely remained unexplored. Making contribution to existing literature on risk management of Shibor, this paper investigates risk of Shanghai Inter- Bank Offered Rate (Shibor) utilizing GARCH-VaR method. The VaR of each product is calculated and compared while GARCH model is designed for a simpler calculation. In order to have a clearer view of Chinese commercial banks, the data selected is Shibor data sample from 2006 to 2016, which is measured by GARCH-VaR model and verified effectiveness by chi-square test. Empirical results show strong evidence for the need of Chinese commercial banks to change the status quo so that the great fluctuation and abnormal situation can be avoided. Policy implication, involving the interest rate management and internal problem in commercial banks, is proposed for financial regulators

The Profitability of Chinese banks: impacts of risk, competition and efficiency

Purpose: This study aims to test the impacts of risk-taking behaviour, competition and cost efficiency on bank profitability in China. Design/methodology/approach: A two-step generalized method of moments system estimator is used to examine the impacts of risk, competition and cost efficiency on profitability of a sample of Chinese commercial banks over the period 2003-2013. Findings: The paper finds that credit risk, liquidity risk, capital risk, security risk and insolvency risk significantly influence the profitability of Chinese commercial banks. To be more specific, credit risk is significantly and negatively related to bank profitability; liquidity risk is significantly and positively related to return on assets (ROA) and net interest margin (NIM) but negatively related to return on equity (ROE); capital risk has a significant and negative impact on ROA and NIM but a positive impact on ROE; there is a significant and negative impact of security risk on bank profitability (ROA and NIM). It is found that Chinese commercial banks with higher levels of insolvency risk have higher profitability (ROA and ROE). Finally, higher competition leads to lower profitability in the Chinese banking industry, and Chinese commercial banks with higher levels of cost efficiency have lower ROA. In other words, the structure–conduct–performance paradigm rather than the efficient–structure paradigm holds in the Chinese banking industry. Originality/value: This is the first paper to investigate the impact of different types of risk, including credit risk, liquidity risk, capital risk, security risk and insolvency risk, on bank profitability. This is the first study which uses more accurate measurements of efficiency and competition compared to previous Chinese banking profitability literature and which tests their impact on bank profitability. The findings not only provide a general picture on the risk, efficiency and competition conditions in the Chinese banking industry, but also give valuable information to the Chinese Government and to the banking regulatory authorities to make relevant policies

Impact of ownership structure and ownership concentration on credit risk of Chinese commercial banks

The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.Purpose- The purpose of this study is to examine the effects of bank ownership structure and ownership concentration on credit risk. Design/methodology/approach- Using panel data on a sample of 88 Chinese commercial banks with 1194 observations over a period of 2003-2018, this study employs system generalised method of moments regression to examine the impact of bank ownership structure and ownership concentration on credit risk. Two measures of credit risk, namely, non-performing loan ratio and loan loss provision ratio are used to ensure the robustness of the results. Findings– The results show that ownership type (both government and private ownership) exert positive and significant impact on credit risk. However, our results indicate that concentration of ownership in the hands of government has negative and significant effect on credit risk while private ownership concentration positively impacts on credit risk. Overall our findings suggest that concentration of ownership in government hands reduces risk, whilst private ownership concentration exacerbates credit risks. Our results are invariant to alternative measures of credit risk and financial crisis. Practical implications – The findings provide useful insight to guide policy decisions in Chinese banks’ lending policies and bank ownership. Originality/value– Using hand collected data on ownership structure and governance from annual reports this study deepens our understanding on the effectiveness of Chinese banks’ corporate governance reforms on managing credit risks

How Bank Capital Structure Affects Business Performance---- Empirical evidence from Chinese Commercial banks

In the end of 2006, China realizes the opening of financial market, thus Chinese commercial banks have to face the global competitors. How to exist and develop in the market with fierce competition has been more and more significant to Chinese commercial banks. Because commercial banks’ business performance is the overall reflection of banks’ competence, so they should consider improving the bank business performance. Thus this study aims to discuss how commercial banks’ capital structure affects its business performance, and gives the recommendations to optimize the banks’ capital structure and improve commercial banks’ business performance. This study introduces relevant fundamental theories of capital structure, and reviews relevant researches on the relationship between bank capital structure and business performance firstly. Secondly, this study redefines the meaning of Chinese commercial banks’ capital structure and business performance and analyzes the current situation and problems of Chinese commercial banks. Thirdly, this study selects 11 Chinese commercial banks as the sample to do empirical research. Based on statistic analysis, the main conclusion of this study is as following. (1) The relative concentration of ownership structure will enhance the business performance for Chinese commercial banks. (2) The characters of the largest shareholders have no association with the business performance. (3) The proportion of subsidiary capital in banks’ total capital has significant positive correlation with bank business performance. (4) Capital adequacy has significant positive correlation with bank business performance. Based on the conclusion, this study proposes the recommendations of improving Chinese commercial banks with the perspective of optimizing capital structure, including optimizing core capital structure, increasing the proportion of subsidiary capital, enhancing risk management, concerning more about the supervision to capital adequacy, perfecting capital market environment. Key words: Commercial bank, Capital structure, Business performanc

Crouching Tigers and Hidden Dragons on the Great Wall Street: Decoding the Corporate Goverance of Chinese Commercial Banks

As China’s economic influence on the world grows, its system of state capitalism is likewise receiving increasing scrutiny. Behind the state capitalism, China’s banking sector, the “Great Wall Street”—parallel to the “Wall Street” in the United States—plays a fundamental role in financing and supporting China’s economy. Contemporary studies of China’s state capitalism, however, focus mainly on Chinese state-owned enterprises, leaving less attention specific to China’s state-owned banking sector which adopts a rather different corporate governance practice. In this paper, I conduct a comprehensive and critical review of the bank governance practice in China. Statutorily, Chinese commercial banks generally follow corporate governance best practices, including the requirement of independent directors and board sub-committees and the separation between chairpersons and CEOs. In reality, however, the Chinese party-state manages to dominate Chinese commercial banks by shifting the power center to the executive team, capturing power through its appointment and reward system, and separating the ownership from control. External governance mechanisms, such as market competition, bank regulation and supervision, and hostile takeovers, are inadequate to pose an effective constraint on the Chinese party-state. Under this practice, the Chinese party-state dominates Chinese commercial banks in a less visible manner and thus becomes the “Hidden Dragon” behind the Great Wall Street. In contrast, private capital, which is also a significant source of investment, only possesses marginal influence on the operational decision of Chinese commercial banks and thus becomes the “Crouching Tiger” on the Great Wall Street. Based on these observations, this article critically assesses this Crouching-Tiger-Hidden-Dragon model from an agency theory prospective. I identify three special agency problems underlying this model, including the misalignment between the public welfare vis-à-vis party-state’s interest, between the party-state’s interest vis-àvis bank executives’ interest, and between the bank executives’ interest vis-à-vis the banks’ interest. These special agency problems, in turn, account for the current challenges faced by China’s banking sector, including the rising risk exposure, the financial constraint of private sectors, and the lack of business innovation

Analyzing the Efficiency and Profitability Evidence from Chinese Commercial Banks after the 2008 financial crisis

After the 2008 financial crisis during the period of 2009 to 2014, the Chinese banking system has gone through further banking reform and policy development alongside efficiency and profitability enhancement. Thus, this study is aim to estimate the determinants of Chinese banking sector profitability by employing 32 Chinese commercial banks. It divides the determinants into bank specific variables (assets size, assets quality et.al), macroeconomic variables (GDPGR, inflation and concentration), which affect bank profitability, which is estimated by ROE. This paper conducts a two-stage estimation. The first stage is to estimate the X-efficiency for each commercial bank by using the stochastic frontier approach (SFA). The second stage is estimating the determinants of bank profitability by using the system GMM. Overall, the results report that different variables have different effects on Chinese commercial banks’ profitability