Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/109054
Authors: 
Yin, Wei
Matthews, Kent
Year of Publication: 
2014
Series/Report no.: 
Cardiff Economics Working Papers E2014/13
Abstract: 
Using a sample of 151 banks over the period 2003 to 2010, this paper estimates a model that examines the effect of switching costs in the Chinese loan market on banking profitability. In keeping with the extant empirical literature it reports a positive relationship between bank profitability and switching costs. Furthermore it reports the estimation of a systems model of switching costs and profitability. The main result is that bank size measured by total assets is has a complex relationship with switching costs. Competition between small banks creates the incentive for lock-in and increased switching costs whereas very large banks are less exercised by lock-in and switching costs. The study also finds that concentration has a negative relationship with switching costs and profitability, confirming the accepted view that the large state-owned banks are concerned with social as well as profit objectives.
Subjects: 
Chinese banking
switching costs
bank profitability
JEL: 
G21
C51
L14
Document Type: 
Working Paper

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