nep-cna New Economics Papers
on China
Issue of 2008‒12‒21
two papers chosen by
Zheng Fang
Ohio State University

  1. Bank Efficiency and Share Prices in China: Empirical Evidence from a Three-Stage Banking Model By Abdul Majid, Muhamed Zulkhibri; Sufian, Fadzlan
  2. Emerging Economies’ Multinationals: General Features and Specificities of the Brazilian and Chinese Cases By Andrea Goldstein; Fazia Pusterla

  1. By: Abdul Majid, Muhamed Zulkhibri; Sufian, Fadzlan
    Abstract: This paper examines for the first time the relationship between China banks’ efficiency and its share price performance. Our analysis consists of three parts. First, we calculate the annual share price returns of the banks for each year between 1997 and 2006. Then we employ Data Envelopment Analysis (DEA) Window Analysis method, first proposed by Charnes et al. (1985) to estimate the efficiency of the banks. Finally, we estimate the annual share price returns over the change in efficiency, while controlling for other bank specific traits. The empirical findings suggest that large China banks have exhibited higher technical and pure technical efficiency levels compared to their small and medium sized bank counterparts, while the medium sized banks have exhibited higher scale efficiency. The relationship between China banks’ efficiency and share price performance suggest that bank efficiency estimates derived from the DEA Window Analysis method contributes significant information towards share price returns beyond that provided by financial information.
    Keywords: Bank Efficiency; Share Prices; DEA Window Analysis; China
    JEL: G1 G2
    Date: 2008–03–01
  2. By: Andrea Goldstein (OECD, Paris - France); Fazia Pusterla (IADB, Washington - USA)
    Abstract: The expansion of South-North and South-South FDI reflects the rise of cross-border capital flows, a distinguishing feature of the contemporary global economy, together with the increasing size and complexity of emerging market multinational corporations (EMNCs). Against this background, in emerging economies governments have become increasingly aware of the role outward FDI (OFDI) can play as an instrument to deepen the integration into the world economy. This paper analyzes recent trends in OFDI from Brazil and China. Using annual data for the period 1980 to 2006 for both countries, we test the well-known investment development path (IDP) theory, according to which the net outward investment position of a country depends on its level of development. Results show that both China and Brazil are moving towards the third stage of the path, where domestic firms have acquired ownership and other advantages to go abroad and become leading outward investors. The role of governments, institutions and the characteristics of domestic firms in both countries are considered to be crucial factors in determining the movement along the path.
    Keywords: foreign direct investment, emerging economies, investment development path.
    JEL: F23 O57
    Date: 2008–10

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