Risk, competition, efficiency and its interrelationships: evidence from the Chinese banking industry

Purpose This study investigates the interrelationships between efficiency, competition and risk in Chinese banking industry. Design/methodology/approach Parametric stochastic frontier analysis is used to estimate bank efficiency; Lerner index as indicator; accounting ratios a translog function are measure different types of finally, three-stage least square estimator investigate interrelationships. Findings The results this show that impact on significant positive, while there positive credit risk, liquidity capital competition. In addition, findings demonstrate efficiency negative. authors do not find any robust diversification higher levels profitability reduce risk. suggest developed sector reduces level China. Originality/value first piece research comprehensively efficiencies