Regional economic development, strategic investors, and efficiency of Chinese city commercial banks

► Attracting strategic investors has been one of the strategies to reform banking in China. ► Focusing on city commercial banks, we explore impacts of strategic investors on banks' efficiency. ► We find that strategic investors significantly increase efficiency in Chinese banks. ► The impact of strategic investors is negatively correlated with regional economic development. ► The findings are explained by the mix of official promotion system and banks' governance structure.