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留学生毕业论文:中国金融系统的改革与发展研(12)

There are some factors affect the profitability. Firstly, it’s bank capitalization. Berger (1995) provide some evidence of the positive relation between bank capitalization and profitability: capital is considered to be the most expensive bank liability in terms of expected return, holding a relatively large share of capital is an important signal of creditworthiness; a well capitalized bank will borrow less to support a given level of assets. However, from table 7, the capitalization of the Chinese banks, measured by the capital to assets ratio, it also lower than the capital to assets ratio of Eastern European banks. The equity to assets ratio was 4% , this figure has fallen since 1998.( Sergio and Daniel 2007) because the largest fall is other commercial banks. JSCBs has the least capitalized, because of their expansion without additional capitals injections. The capital to assets ratio of SOCBs also fell. So they didn’t have the higher capitalization to foster profitability.

Secondly, it is asset quality. The poor asset quality will reduce profitability. Chinese banks generally suffer form poor asset quality. In 2004, the ratio of NPLs to total loans of the Chinese banks was 13%, though government has some restructuring to reduce the NPL ratios, but the NPLs ratio is still high. The asset quality is low, that also because of the provisioning ratio to NPLs is also low. In 2004, the ratio of loan loss reserves to total loans was only 5.5%.

Thirdly, it is bank efficiency. If the bank has the high efficiency, it can more effective use of its loan resources and fostering profitability. (Sergio and Daniel 2007) for the China’s bank, Berger et al. (2006) show that Chinese the SOCBs are least efficient .

3.2.6 Lack of transparency

Fons (1998) states the accounting transparency is important to make the banking system have health trend. If the bank without transparency, the banks were insolvent in an economic sense, and risk contaminating the whole banking system. If the banks always use the opaque accounting methods to keep alive, the banks will be growing weak.

In China, the commercial banks were controlled by the governments, so they think banking information is the state classified information, and intentionally leave depositors in the dark. Furthermore, in the banks’ annual reports, the information concerning corporate credit quality is not transmitted to the public by banks. However, nothing forces the banks to disclose these information to the public. (Langlois, 2001).

The lack of transparency can make the inner-banks have some fraudulent financial deals. If the information was provided to the regulators is highly inaccurate, the poor accounting standards for asset quality were emergences. The lack of transparency is result of the basic lack of information for inside banking system. Banks can’t aware the true ability in time. In the long time, they led to high number of financial frauds deals. In China, there is the 30% of China’s total fraud cases, in some areas the amount goes up as high as 50%.



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