This thesis analyses switching costs in China’s banking market in three main aspects. First, my thesis examines a model that investigates the effect of switching costs in the Chinese loan market on banking profitability. In keeping with the extant empirical literature it reports a positive relationship between bank profitability and switching costs. Furthermore it reports the estimation of a systems model of switching costs determination and profitability determination. The main result is that bank size measured by total assets is positively related to switching costs, while the ratio of deposits to assets is negatively related. The study also finds that banks that have higher cost-income ratios have a negative impact on switching cost. Second, this thesis examines the drivers of firms switching from one bank relationship to another. The results show that the principal driver of a switching action is the credit needs of the firm and a mixture of firm and bank characteristics. The findings support the extant literature that less opaque firms are able to switch more readily than opaque firms. The results also suggest that banks that develop their fee income services are more effective in locking-in their borrowers. Finally, this thesis determines the factors that decisions of firms to keep single bank loan providers or multiple bank loan providers. The results show that large firms are more likely to switch from single to multiple lending relationships. This study also finds that medium size and small firms with high quality prefer a single borrowing relationship while larger and higher quality firms are more likely to be involved in a large number of banking relationships. Increasing market competition decreases the probability of single bank-firm relationship.
| Identifer | oai:union.ndltd.org:bl.uk/oai:ethos.bl.uk:629852 |
| Date | January 2014 |
| Creators | Yin, Wei |
| Publisher | Cardiff University |
| Source Sets | Ethos UK |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
| Source | http://orca.cf.ac.uk/67555/ |
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