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Article: An empirical study of organizational reform of China's bankcard industry and policy recommendations

TitleAn empirical study of organizational reform of China's bankcard industry and policy recommendations
Authors
KeywordsBankcard Industry
China
China Union Pay
Cross-Network Externalities
Organizational Change
Organizational Reform
Platform Competition
Two-Sided Markets
Issue Date2012
PublisherEmerald Group Publishing Limited. The Journal's web site is located at http://www.emeraldinsight.com/info/journals/cms/eabinfo.jsp
Citation
Chinese Management Studies, 2012, v. 6 n. 3, p. 413-425 How to Cite?
AbstractPurpose: The purpose of this paper is to empirically examine the performance of China's bankcard market during 1999-2005 when China's local card association - China UnionPay (CUP) was established in 2002, which integrated many small closed payment systems into an open payment system. Design/methodology/approach: Difference-in-difference (DID) estimator and fixed effects model are employed to assess the potential influences of the establishment of CUP on the performance of China's bankcard businesses. In implementing DID method, it is possible to view the banks (payment entities) that are members of the CUP as the "treatment group" and others outside the CUP as the "reference group", and introduce the "CUP member" dummy variable. Simultaneously, the paper introduces the "incident year" dummy variable labeling 2002 and afterward since the CUP was founded. Therefore, effects of establishing the CUP on the performance of its members can be simply obtained by estimating the coefficient of the interaction term between the "CUP member" dummy variable and "incident year" dummy variable in the estimation equation. The data used in this paper come from the official CUP website and Chinese Financial Statistic Almanac (2000-2006). Findings: The empirical evidence shows that from the micro-perspective of maximizing platform transaction volume, the "closed to open" organizational reform, i.e. introducing the CUP into the market decreased rather than increased the performance of CUP's members. The fundamental reason for this was imperfections in the market's internal management mechanism and multi-party profit distribution mechanism, which led to dislocation and distortion in the positioning and function of the card association-CUP. Originality/value: Different with most other studies that are pure theoretical ones, this study represents one of the few studies that use empirical methods to investigate two-side markets. © Emerald Group Publishing Limited.
Persistent Identifierhttp://hdl.handle.net/10722/178081
ISSN
2015 Impact Factor: 0.379
2015 SCImago Journal Rankings: 0.216
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorFu, Len_US
dc.contributor.authorYu, Len_US
dc.contributor.authorLuo, Pen_US
dc.date.accessioned2012-12-19T09:41:50Z-
dc.date.available2012-12-19T09:41:50Z-
dc.date.issued2012en_US
dc.identifier.citationChinese Management Studies, 2012, v. 6 n. 3, p. 413-425en_US
dc.identifier.issn1750-614Xen_US
dc.identifier.urihttp://hdl.handle.net/10722/178081-
dc.description.abstractPurpose: The purpose of this paper is to empirically examine the performance of China's bankcard market during 1999-2005 when China's local card association - China UnionPay (CUP) was established in 2002, which integrated many small closed payment systems into an open payment system. Design/methodology/approach: Difference-in-difference (DID) estimator and fixed effects model are employed to assess the potential influences of the establishment of CUP on the performance of China's bankcard businesses. In implementing DID method, it is possible to view the banks (payment entities) that are members of the CUP as the "treatment group" and others outside the CUP as the "reference group", and introduce the "CUP member" dummy variable. Simultaneously, the paper introduces the "incident year" dummy variable labeling 2002 and afterward since the CUP was founded. Therefore, effects of establishing the CUP on the performance of its members can be simply obtained by estimating the coefficient of the interaction term between the "CUP member" dummy variable and "incident year" dummy variable in the estimation equation. The data used in this paper come from the official CUP website and Chinese Financial Statistic Almanac (2000-2006). Findings: The empirical evidence shows that from the micro-perspective of maximizing platform transaction volume, the "closed to open" organizational reform, i.e. introducing the CUP into the market decreased rather than increased the performance of CUP's members. The fundamental reason for this was imperfections in the market's internal management mechanism and multi-party profit distribution mechanism, which led to dislocation and distortion in the positioning and function of the card association-CUP. Originality/value: Different with most other studies that are pure theoretical ones, this study represents one of the few studies that use empirical methods to investigate two-side markets. © Emerald Group Publishing Limited.en_US
dc.languageengen_US
dc.publisherEmerald Group Publishing Limited. The Journal's web site is located at http://www.emeraldinsight.com/info/journals/cms/eabinfo.jspen_US
dc.relation.ispartofChinese Management Studiesen_US
dc.subjectBankcard Industryen_US
dc.subjectChinaen_US
dc.subjectChina Union Payen_US
dc.subjectCross-Network Externalitiesen_US
dc.subjectOrganizational Changeen_US
dc.subjectOrganizational Reformen_US
dc.subjectPlatform Competitionen_US
dc.subjectTwo-Sided Marketsen_US
dc.titleAn empirical study of organizational reform of China's bankcard industry and policy recommendationsen_US
dc.typeArticleen_US
dc.identifier.emailYu, L: yulh@hku.hken_US
dc.identifier.authorityYu, L=rp01404en_US
dc.description.naturelink_to_subscribed_fulltexten_US
dc.identifier.doi10.1108/17506141211259113en_US
dc.identifier.scopuseid_2-s2.0-84865388503en_US
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-84865388503&selection=ref&src=s&origin=recordpageen_US
dc.identifier.volume6en_US
dc.identifier.issue3en_US
dc.identifier.spage413en_US
dc.identifier.epage425en_US
dc.identifier.isiWOS:000309328200004-
dc.publisher.placeUnited Kingdomen_US
dc.identifier.scopusauthoridFu, L=48861111500en_US
dc.identifier.scopusauthoridYu, L=55262093100en_US
dc.identifier.scopusauthoridLuo, P=14020113400en_US

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