Transforming China's banks: The IFC's experience

Journal of Contemporary China

Volumn 17, Issue 56, 2008, Pages 449-468

  Hamid, Javed ^a   Tenev, Stoyan ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

BANKING; CORPORATE STRATEGY; FINANCIAL SYSTEM; FOREIGN DIRECT INVESTMENT; INVESTMENT LOCATION; WORLD BANK;

ASIA; CHINA; EURASIA; FAR EAST;

EID: 46249124765     PISSN: 10670564     EISSN: 14699400     Source Type: Journal    
DOI: 10.1080/10670560802000225     Document Type: Article

References (23)

1. Joseph Stiglitz, Second-Generation Strategies for Reforms for China (The World Bank, speech in Beijing, 20 July 1999).
2. In fact some economists (Ibid.) have argued that the fiscal issues of recapitalizations were not that complicated because moral hazard was not serious in the Chinese context.
3. Alicia Garcia-Herrero, Sergio Gavila and Daniel Santabarbabra, 'CESifo', Economic Studies 52(2), (2006), pp. 304-363
4. Guonan Ma, 'Sharing China's bank restructuring bill', China & World Economy 14(3), (2006), pp. 19-37.
5. The Five-Category Classification System classifies loans into one of the five categories: Normal, Special Mention, Substandard, Doubtful and Loss. Loans belonging to the last three categories are referred to as nonperforming loans.
6. LLR requirement: 1% for Normal, 2% for Special Mention, 25% for Substandard, 50% for Doubtful and 100% for Loss. Realizable collateral value is deducted from the loan amount before LLR calculation.
7. Morgan Stanley, Drivers for China's Financial Sector: Reality Check (Morgan Stanley Research, Asia Pacific, 12 February 2007). Available at: Thomson One Analytics.
8. Josephine Lau, 'Chian to push all city banks to boost capital by 2008', Bloomber News, (2 April 2007). Available at: Bloomber.com.
9. Goldman Sachs, China: Banks, (12 December 2006). Research report available at: Thomson One Analytics.
10. Throughout this section, NPLs are defined as loans being classified as 'Substandard', 'Doubtful' or 'Loss' according to the newly implemented Five-Tier Classification System.
11. Kelton Fox-Pitt, Asian Banks Outlook 2007, Global Research, (18 January 2007), p. 328. Available at: Thomson One Analytics.
12. Other parties, including the Asian Development Bank, had participated in holding companies or joint ventures, but never held direct equity stakes in a Chinese bank.
13. Minsheng had a somewhat stronger credit culture from the very beginning driven by the private entrepreneurs who put their own money into the bank.
14. ICEA (a subsidiary of ICBC), City Commercial Banks - New Star of Bank IPOs. Flash Note, (2007), p. 4. Available at: Thomson One Analytics.
15. Ibid., p. 5.
16. Merrill Lynch, Mid Cap Chinese Banks - Seeking Diamonds in the Rough (Merrill Lynch Research, 8 February 2007), p. 18. Available at: Thomson One Analytics.
17. Ibid., p. 19.
18. Ibid., p. 16.
19. Ibid., p. 11.
20. See also Leigh Lamin and Richard Podpiera, The Rise of Foreign Investment in China's Banks - Taking Stock, The International Monetary Fund, Working Papers, WP/06/292 (Washington, DC: IMF, 2006), p. 7.
21. One might refer to this 'premium' as the franchise value of existing branch networks.
22. A. Demirguc-Kunt, L. Laeven and R. Levine, 'Regulations, market structure, institutions, and the cost of financial intermediation', Journal of Money, Credit, and Banking 36(3), (2004), pp. 593-622
23. A. Barajas, R. Steiner and N. Salazar, 'The impact of liberalization and foreign investment in Colombia's financial sector', Journal of Development Economics 63, (2000), pp. 157-196.