Theoretical And Empirical Studies On The Efficiency Of Chinese Commercial Banks

With the rapid economic development and the deepening reform of financial system, the development of Chinese commercial banks has made great achievements, and their international relevant rankings are continuously improving, too. However, compared with the international advanced big banks, they still fall behind in many aspects because of their inefficiency. Then, what is the real condition of Chinese commercial banks'efficiency? What are the main influencing factors? How can we use the empirical method to evaluate their real efficiency conditions and to examine all the possible influencing factors? What are the feasible solutions to improve the inefficiency? These are very important and urgent problems for Chinese Scholars and decision-makers.In recent years, scholars have gained certain achievements, but their researches are almost confined in a static angle, lack of further dynamic theoretical and empirical support. This article is trying to avoid such a static limitation. One of the contributions is to build an efficiency measuring model from both static and dynamic perspective, so that we can make a more comprehensive and objective evaluation of Chinese commercial banks'real efficiency situation. The other contribution is to build a Dynamic Panel Data model (DPD), which introduces the lagging-one-year efficiency indexes as a control variable, to control the cumulative effects of efficiency's self-changing.In a word, this dissertation extends the study of efficiency to a dynamic field. And it contains an introduction and four parts.In the introduction, we first illustrate the background, purpose and significance of research. Meanwhile, we also review and remark the domestic and international academic researches of this field. Based on the above, we further point the research methods, technical line as well as the main innovations of this article.In ChapterⅠ, we first define the connotation of bank efficiency, then emphasize the two major measuring methods—Data Envelopment Approach (DEA) of nonparametric estimation and Stochastic Frontier Analysis of parametric estimation,which are used extensively in this field , and the ways of defining the put-in and put- out indexes for the efficiency measurement models. Based on the above-mentioned methods, this paper builds a dynamic efficiency measurement model .In order to compare with the conclusions of the mainstream literatures, we use a more accepted method to set the input and output variables. Particularly, we take the interest income and non-interest income as output variables to remove the influence of non-performing assets.In ChapterⅡ, we use Data Envelopment Approach (DEA) to estimate the 14 Chinese commercial banks of 1998-2007 efficiency changing conditions, including the static efficiency indexes(cost efficiency(CE) and its decomposition-technical efficiency(TE) and allocate efficiency(AE)) and the dynamic efficiency indexes (Malmquist index and its decomposition (technical efficiency changing index (EC)and technical progress index(TP)).The results indicate that not only the static efficiency indexes but also the dynamic indexes have shown a good development trend, which means that the allocation of the productive resource is optimizing, the competitive capacity is increasing, and the effect of reform is positive. However, in contrast with respective indexes, we will find that there are still large gaps between the state-owned commercial banks and the joint-stock commercial banks, and even in contrast with one sample bank's ten years'efficiency changing condition, we also find the development is changing a lot. Hence, it is necessary to carry out a further study .In ChapterⅢ, on the basis of the domestic and international researches, we set up all the possible influencing factors , carry out the regression analysis for them to find out their influencing mechanism to the bank efficiency. There are mainly two steps for the regression:Step One:We use the Static Panel Data—Fixed Effect Model(FEM) and Random Effect Model(REM) to make an elementary regression. In the results, we validates the three important variables interacting mechanism to the bank efficiency—property right structure , market structure and scale, and we also recognize the other macro and micro elements'influences.Step Two:We use a Dynamic Panel Data model to carry out a steady examination for the above static results. In the results, we find that the irrationality of the market structure and the property right structure are the most two main reasons for the inefficiency of our commercial banks. In addition, we find that the macro environment have great influence on all the six kinds of efficiency indexes, As far as the bank itself is concerned, the elements we noticed have different results. Among them, the most obvious influencing factors are the innovative index and the corporate governance index, and the other indexes also have various influences on the bank efficiency.In Chapter IV, on the basis of the above empirical studying, we put forward the strategies and suggestions to improve Chinese commercial bank efficiency. First, we should continue to consolidate and deepen the achievement of commercial banking system reforms, promote the improvement of governance structure, reduce the stock holding proportion of the big shareholders, push forward the reform of proprietary right structure, and accelerate the diversification of banking market structure; at the same time, the commercial bank scale shoul be expanded with technological innovation. We should also attract more trategy investor and try to make them play a positive role to improve the banks'efficiency,meanwhile, we must handle the relationship between introducing and admitting with them. At last, the macro enviroment policies are immportant,too. China should allow the banks to operate more businesses to stretch their profit space.