Total Factor Productivity Measurement Of Commercial Banks In China And The Determinants Research

This paper measures total factor productivity (TFP) of commercial banks in China from 1999-2008 by making use of Malmquist productivity index and DEA model based on bankscope database, then the Malmquist index is decomposed into two significant indexes (technological efficiency and technology change), and then uses panel data model to test the determinants of banks'efficiency in China. In this paper, I select the Four big state-owned banks, Joint banks, City commercial banks and Foreign banks as the sample banks.Firstly, we analyze the dynamic change of commercial banks'TFP in China during 1999 to 2008 on the view of the whole banks system, then analyze the dynamic change and the reasons of commercial banks'TFP on three arrangement, involved commercial banks with different structure of property right, commercial banks with different scales, all single sample bank, and give some preliminary judges on the determinants of TFP. Second, we try to use panel data model to test the determinants of banks'total factor productivity in China and analyze the relation between TFP and banks'characters. We uses TFP as the independent variable, market share, capital scale, the ratio of equity to asset, the ratio of deposit to loan, the quality of loans, the structure of property right(dummy variable)as the dependent variable to construct Panel Data model to thoroughly analyze the determinants of commercial bank'TFP in China. At last, based on my study, I put forward the way to improve the TFP of commercial banking.According to the accepted materials, there are two innovations in this paper. First, on the empirical method. We measures the TFP of China's commercial banks by using Malmquist productivity index and DEA model based on panel data, and then uses Panel Data model to analyze the determinants of banks'TFP in China. Second, on the selection of sample data. I select more banks than the existing studies to enrich the sample, as city commercial banks and foreign banks has been involved in, and the time period has been extended to 2008, in order to comprehensively reflect the general commercial bank of China.