The Evaluation Of China’s Trust Efficiency And Development Strategy Studies

Since1979, China’s International Trust Investment Company has been established, our trustindustry experience from scratch, from small to large, and gradually move toward healthydevelopment and specification process. National Trust industry reached7.47trillion in assets undermanagement in2012, which is nearly50times of the rate in2004，over the insurance industry in2012in assets under management which is7.35trillion, and become the second largest financialdepartment. However, under the rapid expansion in the asset management, the trust industry’s profitgrowth is not match with the speed of the asset expansion. The deeper reason is that the industry’soverall operating efficiency level is not high, and the efficiency of the trust companies have veryobvious differentiation. Our paper selects the efficiency of trust industry as the research object, anduses some statistical methods such as two-stage ultra-efficient DEA method and Panel-Data,through to the measurement and evaluation to development and operate efficiency of the China’strust industry, and summarize the factors that affecting the development of trust companiescomprehensive and systematic, we can find the strategies and countermeasures to keep the trustindustry’s development health sustainably. This paper is divided into six chapters.. The maincontents are as follows:In Chapter1, this paper introduces the basic theory of the trust and its efficiency. First, thispaper briefly introduces the concept of the trust, elements, basic features and functions; secondly,we introduces the concept of trust company’s efficiency, as well as the various measurement andevaluation methods; Finally, based on our research direction, this paper reviews the relevanttheoretical and empirical research about three aspects, which are the efficiency of financialinstitutions, the theoretical development of the trust‘s efficiency evaluation, and the correlationbetween ownership structure and efficiency in the past.In Chapter2, this paper introduces the trust industry’s development process,developmentcharacteristics, financial status, innovative practices, and the problems existing in the process inChina. First, we introduces the development of the trust in the old China, describing the fiveconsolidation after the reform and opening up, analysis historical reasons for capabilities misplaced."A law two rules" have significance and far-reaching impact on the normal development of China’strust industry. Then, from several aspects that asset scale, profit model, growth drivers, businessmodels and investment area, we analyze the development trend and direction of the trust industryover the past decade, as well as innovative practices. Along with the development of trust industrynorms, trust companies’ ownership structure is becoming increasingly diversified, and thedevelopment process also shows significant regional differences. Based on the rapid growth these years, the trust asset quality and profitability are on the increase, and gain more recognitiongradually. However, in the back of rapid growth, there are still many problems to be solved, such asthe imperfect legislation, regulation is not in place, establish branches is limited, limited liquidityof trust products, gains double taxation.In Chapter3, from the two angles of external environment and internal environment, the papershows the impact of some important factors on the efficiency of the trust industry. Among them, theexternal factors include institutional factors (such as laws and regulations, tax rules, propertyregistration system, product distribution platforms, etc.), the macroeconomic environment (such asmacroeconomic policy, economic development, financial development), social factors (social creditenvironment, investment philosophy), competitive environment, etc. Internal factors include trustownership structure, asset quality, asset scale and human resources management. Taking use ofmodern economics theories to analysis the various influence factors on the efficiency of the trustindustry, has important theoretical and practical significance to improve the operational efficiency.In Chapter4, through using of two-stage ultra-efficient DEA, the paper analyzes the efficiencylevels of35trust companies in the year2005to2010, to find the main factors who affect theefficiency. In Section1, we describe the measure theory, methods and models of the efficiency. InSection2, based on Section1, we give the model form of two-stage super-efficiency DEA. Section3is the empirical analysis, taking use of two-stage the super-efficiency DEA to measure the35trust companies’ operational efficiency. Empirical results show that there is obvious differentiationamong the35trust companies, but the top ten companies is relatively stable this years, and the trustgap has the trend of shrinking year by year. The company performed better efficiency can bedivided into two categories: one category is the state-owned backed by large central enterprises,and the other is the trust companies located in the developed areas. In addition, the risk preventionand cost control capability are also major factors affecting efficiency.In Chapter5, for the vast majority of the trust companies are dominated by state-ownedholding and controlling shareholder equity ratio was significantly higher than other the industry,this chapter starts with the establishment of state-owned shares theoretically optimal path models,and then uses the efficiency values estimatede in chapter4as the dependent variable, from twoperspectives of the nature of the controlling shareholder ownership concentration and ownershipstructure to analyze for further in depth, while using the regional economic development variablesas a factor affecting the efficiency of trust. Empirical results show that, although the overall stateholding is relatively inefficient, sufficiently large shares of state-owned can improve trustcompanies’ efficiency. The proportion of Board of Directors, the number of independent directorsand the Board of Supervisors are significant positive correlation with trust efficiency. Investmenttrust business can significantly improve the efficiency. Regional economic development level andresidents affluence differences will be further widened the regional development gap in the level ofdemand in the trust industry.In Chapter6, based on the foregoing, we summarize and explore the strategy to developChina’s trust industry. First, we introduce Britain, America, Japan and other developed countries’ development process of the trust industry, and get a lot of useful lessons. Based on this, fromsevaral dimensions, we summarize how to promote China’s trust industry. For the trust industry, weshould increase the products categories of capital management business, strengthen the innovationfor investment bank trust business. It’s important to regulate vigorously and develop the innovativebusiness, proprietary business, solve the problem of financial dislocation objects, and to strengthenthe win-win cooperation with other financial institutions, and establish a professional managementteam. Further, optimize ownership structure and governance structure.