Competition and bank risk-taking: the mediating role of innovation for Chinese banking industry
by Ti Hu; Chi Xie
International Journal of Applied Decision Sciences (IJADS), Vol. 9, No. 2, 2016

Abstract: This paper introduces a new perspective to investigate the relationship among competition, innovation and bank risk-taking by utilising innovation as a mediator. The structural equation modelling (SEM) is employed to test our hypotheses with data collected from Chinese banking industry. The empirical results demonstrate a chained relationship among competition, innovation and bank risk-taking. Instead of directly affecting risk-taking, competition mediates risk-taking by innovation, which means innovation plays a full mediating role in the relationship between competition and risk-taking. We also find competition has a negative effect on bank risk-taking and a positive effect on innovation, and a negative relationship exists between innovation and bank risk-taking.

Online publication date: Wed, 02-Nov-2016

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