A Restudy On Efficiency Of China's Commercial Banks

Banking is the heart of the financial industry, grasp the lifeline of economic development funds, and play a pivotal role in the economic development of our country. Efficiency of commercial banks got widespread concern of scholars home and abroad, and the measurement methods were improved constantly. Owning to the limitation of methodology, most of the domestic scholars did not take bad loans into account when calculated bank efficiency. The paper applies directional distance function method to measure efficiency of China's commercial banks over the period 2001 to 2009 while accounting for non-performing loan. Analysis the influencing factors of banking efficiency accounting to the estimate, and give the relevant recommendations combined with the case of Minsheng Bank, who has the highest average efficiency. The results show, while considering non-performing loans, the efficiency of the Minsheng Bank ranks first, and has 6 times on the production frontier. The efficiency of joint venture commercial banks is higher than the state-owned commercial banks. The efficiency of the Agricultural Bank is the lowest of all samples. While not considering non-performing loans, the efficiency of the Shanghai Pudong Development Bank ranks first. The average efficiency of the Bank of China is the lowest. The estimated efficiency without considering non-performing loans is lower than while considering non-performing loans. Banking efficiency is mostly influented by micro factors. The rate of fixed-asset investment growth, the ability to withstand risk, asset size, and the rate of non-performing loan, ownership structure have a significant impact on the efficiency of banks. The rate of GDP growth and rate of CPI growth, money supply and asset allocation have no significant effect on the efficiency of banks.