Privatization and optimal share release in the Chinese banking industry

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Title:	Privatization and optimal share release in the Chinese banking industry
Authors:	Chen, Chien-hsun;Mai, Chao-cheng;Liu, Yu-lin;Mai, Shin-ying
Contributors:	淡江大學產業經濟學系
Keywords:	Privatization;Mixed oligopoly model;Foreign equity participation;China's financial sector;Optimal share release
Date:	2009-11
Issue Date:	2011-09-29 10:51:32 (UTC+8)
Publisher:	Amsterdam: Elsevier BV * North-Holland
Abstract:	This paper establishes a mixed oligopoly model to explore how the government determines the percentage of shares of the state-owned banks to be released to foreign investors under the goal of seeking to maximize social welfare. The theoretical model finds that the release of shares of state-owned banks to foreign investors will reduce the outputs of the state-owned banks. The direction of the change in the profitability of the state-owned banks depends on the percentage of the shares released. The direction of the changes in the levels of social welfare also varies. If the gap in production efficiency between the state-owned banks and private banks is not large enough, we can be certain that a partial release of shares is the government's best policy.
Relation:	Economic Modelling 26(6), pp.1161-1171
DOI:	10.1016/j.econmod.2009.05.004
Appears in Collections:	[Graduate Institute & Department of Industrial Economics] Journal Article

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