Fuli Yang
Published 30 October 2026 · Version 1.0 · pp. 17-29
Abstract
China’s trust industry has returned to asset growth while its fee-generating capacity has not expanded at the same pace. This study documents that divergence using a balanced panel of nine trust institutions with scope-consistent public disclosures from 2021 to 2025 (45 firm-years). On a contemporaneous year-end basis, these institutions held RMB4.87 trillion of trust assets in 2021 (23.7% of the industry total) and RMB8.08 trillion in 2024 (27.3%). The primary measure is fee density: annual trust-business or net fee income divided by year-end trust assets under management (AUM), expressed in basis points. Across institutions, median cumulative AUM growth was 117.1%, whereas median fee-income growth was −32.8% and median fee density fell by 62.2%. Fee density declined at all nine institutions, yielding an exact two-sided sign-test p-value of 0.0039. A two-way fixed-effects log specification estimates an elasticity of fee income with respect to AUM of 0.623 (homoskedastic standard error 0.185), below the proportional benchmark of one. Point estimates remain below one across alternative windows, first differences, exclusion of explicitly caveated observations, and leave-one-institution-out checks, although the estimate excluding one influential institution is not distinguishable from proportional scaling. The evidence therefore supports a consistent descriptive pattern of scale–fee dilution, with magnitudes that vary across sample perturbations. It does not identify a causal mechanism and does not equate fee density with accounting profitability. The findings suggest that AUM growth is an incomplete performance signal during a transition toward asset-service and standardized asset-management activities.
Cite this article
Fuli Yang (2026). When Scale Outruns Fees: The Scale–Fee-Density Paradox in China’s Trust Industry. GARCH, 1(1), 17-29.
Versions and rights
This is the GARCH journal edition. The manuscript retains its original research-version date. Earlier working paper: SSRN 7313279.
Copyright © 2026 Fuli Yang. All rights reserved. Full text is freely available to read and download.