We document a substantial dispersion of interest margins charged by commercial banks across Chinese provinces. As our empirical study provides evidence that resource costs are the primary drivers of Chinese bank interest margins, we build a parsimonious dynamic stochastic general equilibrium model that captures this feature. Our analysis suggests that productivity differentials in the banking industry among Chinese provinces are substantial. Banks in less developed provinces adopt more labor-intensive technologies that enable them to smooth the impact of productivity shocks. The adoption of a common nationwide banking technology would cause substantial increases in financial costs and amplify the volatility of macroeconomic fluctuations across provinces.

Dia, E., Jiang, L., Menna, L., Zhang, L. (2023). Interest margins, lending rates and bank productivity among Chinese provinces. INTERNATIONAL REVIEW OF ECONOMICS & FINANCE, 84(March 2023), 104-127 [10.1016/j.iref.2022.10.022].

Interest margins, lending rates and bank productivity among Chinese provinces

Dia E.;Menna L.;
2023

Abstract

We document a substantial dispersion of interest margins charged by commercial banks across Chinese provinces. As our empirical study provides evidence that resource costs are the primary drivers of Chinese bank interest margins, we build a parsimonious dynamic stochastic general equilibrium model that captures this feature. Our analysis suggests that productivity differentials in the banking industry among Chinese provinces are substantial. Banks in less developed provinces adopt more labor-intensive technologies that enable them to smooth the impact of productivity shocks. The adoption of a common nationwide banking technology would cause substantial increases in financial costs and amplify the volatility of macroeconomic fluctuations across provinces.
Articolo in rivista - Articolo scientifico
Chinese economy; Heterogeneous regions; Interest margins; Resource costs;
English
11-nov-2022
2023
84
March 2023
104
127
none
Dia, E., Jiang, L., Menna, L., Zhang, L. (2023). Interest margins, lending rates and bank productivity among Chinese provinces. INTERNATIONAL REVIEW OF ECONOMICS & FINANCE, 84(March 2023), 104-127 [10.1016/j.iref.2022.10.022].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/401419
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