The Research On Cost Efficiency Of Chinese Listed Banks

In recent several years, with the persistent globalization of local economy and expansion of financial liberalization in China, our banking industry developed rapidly. There are already 16 banks have finished the shareholding reform and initialed public offerings in open market in China until the end of 2010, the total shareholding value of these 16 banks are taking around one quarter of the aggregate amount of Chinese stock market and contributing approximate about 43% of the whole profit. Although they have shown obvious performances but with the emergence of foreign competitors and the continuous financial market opening, they also facing of epic proportion pressures and challenges. At the same time, because of the special developing path in last century, Chinese banking industry ignoring the quality and efficiency all along, and this kind of ideology is the core reason which can explain why Chinese banking industry alway be in a inferior position compel with contemporaneous foreign colleagues, such as relatively weaker comprehensive competitive force and anti risk capability, insufficient management abilities and earning capacity, low quality assets, and most important lack of innovation in every branches. We believe, the all above problems can be solve under the vision of cost efficiency, and if we can find a path to measure and improve it properly, then we will run our banking industry on a right way and direction of strong competitive ability and sustainable development.In this article, we selected 14 banks from the 16 listed banks in China, and all the data collection works are based on financial statistics yearbook and listed banks annals, measure method based on data enveloped analysis (DEA), and this is one of nonparametric analysis, using DEA-Solver (Version 3.0) as the calculate tool. After the calculation and analysis, we found some useful conclusion as below. State-owned commercial banks' cost efficiency are lower than shareholding commercial banks and urban commercial banks, but they got a better stability, which means better than shareholding commercial banks but worse than urban commercial banks, and urban commercial banks have the best cost efficiency in these three research groups, although the shareholding commercial banks' average cost efficiency is in the middle position but they got irregular individual differences.Based on the original data, calculation result and analysis, we offered some suggestions in the end of this article which aiming at how to improve the average level of Chinese listed banks' cost efficiency in order to enhance the comprehensive competitive ability and viability under the background of global financial market. They are properly control the scale of individual bank and understand the biggest is not the best in most time, optimize banks' capital structure and pay attention on less capital consuming fields, enhance the return on investment, re-distribution limited operation resources and expand non-interest income's proportion in total amount, at the same time diversify the income structure. Through the research on some typical listed banks'cost efficiency we can accurately reflect the current situation and the average cost efficiency level in China and mean while give targeted suggestions and rational solutions to deal with some problem which being facing to them, such as enhance the internal management level and assessments' quality, strengthen profitability and anti-risk capacity and innovation power.