An Empirical Research On The Relationship Between Ownership Structure And Efficiency Of Joint-stock Commercial Banks In China

Based on existing theory we establish an empirical research procedure to analyze the relationship between ownership structure and efficiency of commercial banks. Using data from available annual report we investigate the relationship between ownership structure and efficiency of the joint-stock commercial banks in China. We do the empirical research in a two-stage estimation procedure. Firstly we estimate the bank's cost efficiencies using stochastic frontier approach (SFA), and then regress the predicted efficiencies upon the banks' ownership types that are divided according to the type of shareholders, ownership concentration and negotiability.The result shows: the state-owned shares have positive effect on the bank's efficiency, while dominant shareholder's state-owned nature has negative one. The institutional shares, especially the foreign ones, increase the bank's efficiency obviously, and with increasing of the amount of institutional shares the bank's efficiency has a trend of reversed U. And inside ownership doesn't influence the bank's efficiency in our research. We also find that the ownership of Chinese joint-stock commercial banks is mostly concentrated, which has a negative effect on the bank's efficiency. Finally, listing can increase the bank's efficiency, but after listing the bank's efficiency will decrease with the increasing of the amount of negotiable shares.