Study On The Performance Evaluation Of Commercial Banks Under The Multidivisional Structure

Commercial banks are facing increasing internal and external pressure of competition and regulatory requirements, under the impact of the interest rate liberalization, free exchange of RMB, financial disintermediation and the internet finance. It is unsustainable to rely on the extensive growth mode of scale expansion, the homogeneity of the market positioning and business strategy. The adjustment and optimization of organization structure are becoming one of the important means to break the development bottleneck of commercial banks with the growth of energy accumulation and forming the core competitiveness. Multidivisional structure has been widely used to improve the performance and the competitiveness in research and western commercial bank’s practice. Multidivisional structure in domestic commercial banks is still on the exploratory stage, which lacks theoretical research and practical experience. How to correctly evaluate the performance of banks under the multidivisional structure is becoming one of the urgent problems for commercial banks and domestic scholars.The subject of this thesis is to build the performance evaluation system of banks under the multidivisional structure. This thesis chooses the indices and establish the evaluation model which can reflect the business characteristics of multidivisional structure. The evaluation system is scientific, rational and applicable, verified by the empirical analysis on the actual operation data. It fills a vacancy of current domestic research.Based on the current organization structure and organization performance theory, the thesis extends the theory to the commercial banks under the multidivisional structure. The impact theory includes information transmission, transaction cost, professional knowledge and human resources. By the theoretical analysis and the comprehensive summary on the impact and characteristics of the multidivisional structure of commercial banks, the thesis selects a total of twenty-one indices system, according to the unity, comprehensiveness, integrity, comparability and practicability principal. The index system can be divided into five categories, including the scale, benefit, risk, human resources and system. It contains financial and non-fmancial indices, quantitative and qualitative indices.The performance evaluation of domestic commercial banks has particular characteristics, such as multicycle, multiple inputs and outputs, short running time, lack of samples, and the importance of non-financial qualitative indices, etc. The thesis tries to use the bootstrap method to improve the DEA model, integrates the AHP model and the DEA model, and eventually builds up the Bootstrap-AHP-DEA model and Bootstrap-AHP-DEA-Malmquist model as the performance evaluation of commercial banks under multidivisional structure.In the empirical analysis, the thesis mainly focuses on the internal division of commercial banks. It evaluates the performance of commercial banks under multidivisional structure, by using the actual data of a typical commercial bank from2006to2012as a sample, via the evaluation system built in this thesis. Meanwhile, it establishes models for the logarithmic panel data relationship between Bootstrap-AHP-DEA efficiency value and all indices in the performance evaluation system, between Boostrap-AHP-DEA-Malmquist total factor productivity index and the key indices. Thereby we analyze the main factors that affect the performance and its changes of commercial banks. The empirical result verifies the multidivisional structure’s performance theory analysis and operational characteristics. It reveals the relatively more significant indices to the efficiency value, including income, the degree of employee loyalty, right, duty and benefit corresponding degree, organizational learning capability, employee number, cost income ratio and the total cost. It also reveals the relatively more significant indices to technical progress index and total factor productivity index, including average return on assets, new product launch, right, duty and benefit corresponding degree, organizational learning capability and cost income ratio. Confidence interval and the sensitivity analysis are given to ensure the robustness of the model.This thesis suggests that the multidivisional structure will be one of the future direction of commercial banks. Banks should try to use the applicable multidivisional structure, and set up the performance evaluation system suitable for itself. The performance evaluation system established in the thesis can provide a beneficial reference for commercial banks. Commercial banks’multidivisional structure reform should take the following measures. Firstly, it should give priority to development strategy and business orientation. Secondly, it should focus on improving the level of specialization, innovation ability and learning ability, and strengthening the distinguishing feature. Finally, it should design the specific form for the purpose of reducing information cost and transaction cost, endow the division’s independent operation with the power and obligation, and establish the people-oriented human resources management model.