Charter Value, Official Implicit Insurance and Risk-taking Behaviors of Chinese Banks
Using a panel data of 14 representative commercial banks in China over the period of 1994-2003, interactions among charter value, official implicit insurance and bank risk-taking behaviors are investigated. Empirical estimation occurs in two steps. Firstly, the relationships relating charter value and implicit insurance to bank risk-taking are examined. Under the assumption of implicit insurance absence, the results find a negative relation between charter value and bank risk, suggesting that banks may voluntarily self-restrain from risk. However, as the interaction of bank charter and implicit insuance is considered, the results show that implicit insurance greatly hurts the risk-control of charter value. Secondly, partitioned tests on bank groups with different ownership are performed. The results report that negative relation between bank charter and risk hardly exists, inconsistent with the standard view that higher charter values reduce the incentives of banks to take excessive risks. The last evidence proves that implicit insurance almost covers the banking and self-discipline mechanism of charter value can not be fully achieved.
Charter value Implicit insurance Risk-taking Panel data
Li Yanping Han Liyan
School of Economics and Management, Beihang University, Beijing, China;Faculty of Finance and Bankin School of Economics and Management, Beihang University, Beijing, China
国际会议
北京
英文
2007-11-01（万方平台首次上网日期，不代表论文的发表时间）