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Does Bank Ownership Imply Efficient Monitoring? Evidence From Bank Lending And Firm Investment Efficiencies In China, Gary G. Tian, Xiaofei Pan
Does Bank Ownership Imply Efficient Monitoring? Evidence From Bank Lending And Firm Investment Efficiencies In China, Gary G. Tian, Xiaofei Pan
Gary Tian
This study investigates the effect of bank ownership on lending and firm investment efficiencies to give reasons for the mixed evidence that exists on the impact of bank ownership on firm performance. Using China's listed firms as an example, we find that bank ownership reduces the efficiency of bank lending and harms investment efficiency for state-owned enterprises (SOEs), while simultaneously relating to optimal lending decisions and enhanced investment efficiency for non-SOEs. Our findings suggest that banks monitor non-SOEs effectively, but are less effective at monitoring SOEs. We document that banks' ex post monitoring on non-SOEs' investment policy results from their …