An Empirical Research On Efficiency Of China's Commercial Banks

The paper systematically analyses the efficiency of commercial banks in China with the Data Envelopment Analysis (DEA) method. After reviewing the existing research at home and abroad, a modified DEA model will be set up, and used to analyze the X-efficiency and scale efficiency of 15 commercial banks in China from 1996 to 2002. Comparison of these two efficiency shows that the efficiency of China's commercial banks is low, especially the state-owned commercial banks which possess most of banking resources, and that the X-inefficiency of banking industry is larger than the scale inefficiency.Correlative analysis technique will be used to analyze the relation between efficiency and relative factors, and the results show that factors such as macro-economy, the deposit and loan market shares of the state-owned commercial banks, the structure of the property right, the stimulating scheme and productivity, the staff quality, non-performing loans of commercial banks have great impact on the efficiency of banking industry in China. Based on the empirical results of this paper, some significative propositions will be suggested and analyzed.