This paper aims to assess the performance of China's banks by their geographical distribution of loans and deposits, with the application of Generalized Estimating Equation (GEE) method's multiple linear regression. We chose one of the four largest banks, Agriculture Bank of China, with data from 1990 to 2008 as the sample bank. We identified that branches' performances in the Yangtze River Delta ranked first and were followed by the Pearl River Delta. Different than that of the previous literature, the results further indicate that branches in economically well-developed regions were not necessarily better-performed. The empirical evidence also implies that distance impacts performances between branches and their headquarters. We emphasize that China's banks benefited greatly from the support of various government policies. The management efficiency of the ABC in the other four regions particularly the Bohai Sea and the Central regions with larger GDPs, needs to be strengthened with further deregulation of China's financial industry to domestic and international competition in the coming years. Overall the evidence provides insights into bank-specific management in efficient allocation of scarce resources and could contribute to inform government policy, as well as to improve managerial performance and research issues on this regard.
Journal of Applied Finance & Banking 3(5), pp.39-53