Article citationsMore>>

X. Q. Fu and S. Heffernan, “The Effects of Reform on China’s bank Structure and Performance,” Journal of Banking & Finance, Vol. 33, No. 1, 2009, pp. 39-52. doi:10.1016/j.jbankfin.2006.11.023

has been cited by the following article:

• TITLE: Bank Non-Performing Loans (NPLS): A Dynamic Model and Analysis in China

  AUTHORS: Shihong Zeng

  KEYWORDS: Bank Non-Performing Loans; Finance Frangibility; Chinese Banking System

  JOURNAL NAME: Modern Economy, Vol.3 No.1, January 5, 2012

  ABSTRACT: In this paper we report on a utility function (loss function) and model that we designed by using optimal control theory based on previous studies. we found that: (1) the Hamiltonian multiplier of the bank NPLs growth rate in the model was obtained using the negative derivitive of the utility (defined as loan function minus non-performing loan function) with respect to the NPLs multiplied by a factor which expresses the rate of change in NPLs over time with respect to the NPLs, the formula is λN=(1/δ)(-vmNm-1)=(1/δ)U'; (2) the model determines the equilibrium value of the saddle point of the bank NPLs; (3) the model can explain the NPLS phenomenon in the Chinese banking system as mainly significant in the state owned banks (SOBS); (4) The paper supports the following hypothesis by considering the situation in China: the equilibrium value of the bank NPLs is dependent on micro-economic factors but influenced by macro-economic factors.