The Efficiency Study Of Listed Commercial Banks Of China Based On SFA

In recent years, the research on the efficiency and its factor of the commercial banks is the new topic in the performance evaluation of a financial institution. The researchers at home and abroad are using efficiency measurement method rather than financial indicators. Based on the fact that China's commercial banks are very important in the whole financial system, this paper sums up the research method and theoretical model about commercial banks'efficiency study, and then applies the method of stochastic frontier analysis(SFA) to measure the cost efficiency of 13 listed commercial banks in China. On this basis, this paper analyzes the cost efficiency factor from the commercial banks'own condition and explores the underlying reason.Based on previous literatures, this paper summarizes the advantages of SFA compared to the data envelope analysis (DEA), and then uses three theoretical models of SFA to evaluate the cost efficiency and cost efficiency ranking of 13 sample commercial banks from year 2005 to 2009.The empirical results of the three models all show that there is an upward trend in the cost efficiency and the cost efficiency difference between different commercial banks are becoming narrow. That means they have the same trend. Then, this paper makes a consistency test to the results of the three theoretical models. The cost efficiency is through consistency test but the cost efficiency ranking isn't. The SFA (1992) is the best model.After the cost efficiency empirical study, this paper will do the factor analysis from the following six aspects:a commercial bank's profitability, liquidity capability, operational capability, risk resilience, innovation and its own nature. We find that the profitability, operating capacity and mobility capacity have a positive role in promoting the cost efficiency of a commercial bank, mobility capabilities of most, followed by the operational capabilities, and finally profitability. Risk resilience has a negative effect and the innovation ability has no effect. The nature of the commercial banks also affects its cost efficiency, the cost efficiency of the state-owned commercial banks are lower that of the joint-stock commercial banks.