Work

The Real Effect of Banking Globalisation on Bank Liquidity Creation in China's Banking Sector: Evidence From the Belt and Road Initiative

Year: 2025

Type: article

Abstract: ABSTRACT To explore the real effect of banking globalisation on bank liquidity creation, we investigate plausibly exogenous variations in the expectation of further banking globalisation under the Belt and Road Initiative (BRI), which further opens the gate to foreign investors. Using data from both listed and unlisted commercial banks in China from 2007 to 2022, we obtain the results showing that implementation of the BRI enhances the on‐balance sheet liquidity creation of banks with foreign investors. Further analysis shows that the BRI has more significant positive economic effects on state‐owned commercial banks and foreign banks. Additionally, banks with foreign ownership that are small, unlisted, or located in eastern coastal regions create more liquidity since the implementation of the BRI. Our findings indicate that deepening banking globalisation plays an outstanding role in China's banking industry.

Source: International Studies of Economics

DOI: 10.1002/ise3.70019

Authors: Xuanyi Shi, Wenjun Wu, Yifan Chen, Chunyang Wang

Institutions: Xiamen University of Technology, Xiamen University, Macau University of Science and Technology, Qingdao Vocational and Technical College of Hotel Management, Ocean University of China

Language: English

Topic: Banking stability, regulation, efficiency

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Industry, innovation and infrastructure, Decent work and economic growth

Open Access status: gold

Estimated APC paid: $2,600