AN OUTLOOK ON CHINESE BANKS BASED ON TOTAL ASSETS AND EQUITY PERSPECTIVE

Abstract

This study gives the analysis of the determinants of banks' profitability in China over the period of 2003-2007 by investigating the cointegration and the causal relationship between total assets (TA) and total equity (TE) of Chinese banks. The analysis employs Augmented Dickey Fuller (ADF) test Johansen cointegration test and Granger causality test on Chinese banking sector over the study period in order to examine the relationship between these 2 variables. The empirical results have found strong evidence that the variables are cointegrated.