The Analysis Of Efficiency Of Policy Banks In China

Three policy banks founded in 1994 play a big role in the development of our economic and financial market. But at the same time, with the further development of the reform, great changes in economic and social environment have taken place. On one hand, the entrance of foreign financial institution and commercial banks increase the competition; On the other hand, inherent problems of the banks restrict their development. In a word, the reform and restructuring of the policy banks are imperative.Based on the analysis of efficiency of the policy banks, we can find the way to improve the productivity and competitiveness for policy banks, so as to provide direction for banking reform and restructuring. Policy banks are primarily founded to serve the national economic development, not to make profit, so the Guaranteed Profits strategy is their choice.This led the research of efficiency based on maximizing revenue or minimizing the cost as the premise of the parametric and nonparametric methods do not apply. But the Malmquist TFP doesn't need this premise, which makes it the most appropriate and science method to analyze the efficiency of policy banks. In this paper, by using Malmquist TFP index to analyze the efficiency of the National Development Bank, Export-Import Bank and the Agricultural Development Bank during 2000-2009, we come to the conclusion that in the past 10 years, the efficiency of China's policy banks was undulating. Overall, the average annual growth rate of State Development Bank of the highest followed by the Agricultural Development Bank, the Export-Import Bank last.Through the empirical analysis and policy banks'actual operating situation, we propose to improve the efficiency of China's policy banks. On the basis of a clear positioning, policy banks should change concepts and improve corporate governance to promote policy bank efficiency.