Efficiency Of Commercial Banks In China Using DEA

This paper uses DEA( Data Envelopment Analysis ) model to evaluate the relativeefficiency of 14 commercial banks in China from year 2001 to 2003. The efficiency ofthese banks can be obtained and ranked from the CCR model and the SuperEfficiency model. The models reveal that the efficiency of commercial banks in Chinahas been increasing these years, and the efficiency of the state-owned banks is lowerthan efficiency of private banks, but the efficiency difference between these two typesof banks is becoming less. Then, the factors which influence the efficiency ofcommercial banks are investigated by linear regression. The results of regressiondemonstrate that credit management and the capacity of making profit are the mostimportant factors to affect the efficiency. As a conclusion, it is required that banks inChina reform the property right, establish risk assessment and control system, anddiversify the business.