The Empirical Research On The Effects Of Ownership Structure On Banks' Efficiencies In China

Based on existing theory and the combination of the Change of Ownership Structure of Commercial Banks in China and status of the statistical analysis of bank ownership structure, we establish an empirical research procedure to analyze the relationship between ownership structure and efficiency of commercial banks. Firstly, we sum up in three effects from existing theory, that is right-to-decide-effect, management-effect and supervise-effect, to describe the mechanisms of how ownership structure works on the efficiency of commercial banks in China. Secondly, we use empirical model to prove the supposition in theoretical analysis by using data from annual report of 19 banks in China and other resource during 1998 to 2008. In order to find out more useful result, the empirical analysis of this paper is divided into two steps. Fristly, we estimate the banks'cost efficiencies and profit efficiencies by using stochastic frontier approach(SFA), and then regress the predicted efficiencies upon the banks'ownership types that are divided according to the type of shareholders and ownership concentration.The result shows: the state-owned shares have negative effect on the bank's efficiency. The institutional shares, especially the foreign ones and state-owned corporate ones, increase the bank's efficiency obviously. We also find that, the optimal shareholding of the 1st shareholder scale is from 59% to 72%.