Title: Competition and bank risk-taking: the mediating role of innovation for Chinese banking industry

Authors: Ti Hu; Chi Xie

Addresses: College of Business Administration, Hunan University, China ' College of Business Administration, Hunan University, China

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.

Keywords: banking industry; competition; bank risk taking; innovation; mediating effect; China; structural equation modelling; SEM.

DOI: 10.1504/IJADS.2016.080126

International Journal of Applied Decision Sciences, 2016 Vol.9 No.2, pp.139 - 155

Received: 22 Mar 2016
Accepted: 30 Jun 2016
Published online: 02 Nov 2016 *

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