An Empirical Analysis of the Profitability of Subsidiary Banks of Financial Holding Company after Financial Tsunami
Date Issued
2015
Date
2015
Author(s)
Chen, Yi-Chung
Abstract
This study aims to explore the profitability of the subsidiary banks of domestic financial holding company after global financial crisis. Subsidiary banks will be divided into two types of government-owned shares and the non-government-owned shares. The study period set for the 2009∼2014. Dependent variables are Return on Equity (ROE) and Return on Assets (ROA). Independent variables are Debt Ratio, Earning Before Tax Margin, Loan-Deposit Ratio, Operating Expenses Ratio, YOY%-Pre-Tax Income, Overdue Loan Ratio, Loan Loss Provision Ratio, Foreign Currency Deposits Growth Rate, The proportion of SME loans, Private Enterprises Loan Growth Rate and Deposit- MOM %。This study use the thoroughly testing method of Panel Data to find the most appropriate testing way and try to figure out the factors which would affects profitability of subsidiary banks of domestic financial holding company. In the end of this study, using the research conclusion to find the difference of profitability between government-owned and non-government-owned Subsidiary banks. The empirical results show that：（1）The factors which significantly affect profitability of the subsidiary banks are Debt Ratio, Earning Before Tax Margin, Loan-Deposit Ratio, Operating Expenses Ratio, YOY%-Pre-Tax Income, Foreign Currency Deposits Growth Rate and Private Enterprises Loan Growth Rate after global financial Crisis.（2）After global financial crisis, Loan-Deposit Ratio positively affects the profitability of government-owned subsidiary banks. However, Loan-Deposit Ratio negatively affects the profitability of non-government-owned subsidiary banks.（3）When it comes to The proportion of SME loans, it positively affects the profitability of government-owned subsidiary banks. However, it negatively affects the profitability of non-government-owned subsidiary banks.（4）Debt Ratio, Overdue Loan Ratio, Foreign Currency Deposits Growth Rate and Private Enterprises Loan Growth Rate cause different effect on profitability between government-owned and non-government-owned subsidiary banks. There was a significant difference can be seen on business strategy between government and non-government-owned subsidiary banks after global financial crisis.
Subjects
Global financial crisis
Subsidiary banks of domestic financial holding company
profitability
Return on Equity
Return on Assets
Panel data
Type
thesis
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