As a key component of the national economy, the banking system plays a critical role in resource allocation and economic growth. Different from the spontaneous adoption of new systems to replace old ones based on the cost–benefit principle in the process of banking reform in Western countries, previous reforms to China’s state- owned banks have been completed from the top down, so most commercial banks have retained a certain proportion of state ownership. Using a sample of 42 A-share listed commercial banks from 2008 to 2020, this paper empirically tests the impact of state ownership on the financial performance of listed commercial banks in China. The findings suggest a positive relationship between the proportion of state ownership and the financial performance of commercial banks, with the positive effect due mostly to the improvement of deposit and loan quality. However, the state controlling shareholder and political connections of the management will weaken the positive influence mentioned above. In addition, bank headquarters in areas with high marketization will enhance the positive effect of state ownership on financial performance. This paper contributes to the literature on the influence of state property rights, political connections and marketization on the financial performance of commercial banks with new evidence from one of the major emerging markets.