Information disclosure and depositor discipline in the Chinese banking sector

Yuliang Wu, Michael Bowe

Research output: Contribution to journalArticle

16 Citations (Scopus)

Abstract

We investigate the relationship between information disclosure and depositor behaviour in the Chinese banking sector. Specifically, we enquire whether enhanced information disclosure enables investors to more effectively infer a banking institution's risk profile, thereby influencing their deposit decisions. Utilising an unbalanced panel, incorporating financial data from 169 Chinese banks over the 1998–2009 period, we employ generalised-method-of-moments (GMM) estimation procedures to control for potential endogeneity, unobserved heterogeneity, and persistence in the dependent variable. We uncover evidence that: (i) the growth rate of deposits is sensitive to bank fundamentals after controlling for macroeconomic factors, diversity in ownership structure, and government intervention; (ii) a bank publicly disclosing more transparent information in its financial reports, is more likely to experience growth in its deposit base; and (iii) banks characterised by high information transparency, well-capitalised and adopted international accounting standards, are more able to attract funds by offering higher interest rates.
Original languageEnglish
Pages (from-to)855-878
Number of pages24
JournalJournal of International Financial Markets Institutions and Money
Volume22
Issue number4
DOIs
Publication statusPublished - Oct 2012

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

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