Study On Chinese Trust Company's Efficiency And Its Influence Factors Based On SFA

Since the new two rules of Trust promulgated and implemented in 2007, Functional position of trust companies become more and more clear, every trust company built up professional business model, and return to the trust business actively, Trust industry enter a new period of rapid development. But, the development of the trust industry still at the initial stage. With the growing size of assets, Trust companies did not establish reasonable model of profit and stable structure of revenue, and results of operation had greater fluctuations. On the other hand, Trust companies within the industry have large gap between the strength, there is not an industry leader company which have greater influence on the financial industry. So, the situation of weak position in the financial industry in many years has not substantial changed. In the long term, trust development will largely depend on operating efficiency, rather than the rate of expansion of scale. Therefore, with the rapid development of Chinese financial sector and increasingly competitive environment, it is important to study efficiency of trust company.In this paper, we are reviewing to domestic and foreign literatures about efficiency of financial institutions firstly, and then choose 28 Chinese trust companies as sample, using data in 2006-2009 for its empirical analysis through SFA, and analysis Chinese trust company from two aspects: technical efficiency and factors that affect the technical efficiency. In technical efficiency aspect, the empirical results show that the value of overall efficiency is lower; there is greater gap between the strength and greater fluctuations on average technical efficiency. This also shows that Chinese trust companies have poor anti-risk capability and not have stable structure of revenue. In factors that affect the technical efficiency aspect, the empirical results show that quality of staff and ratio of trust returns have significant positive effect on technical efficiencies, trust companies which registered in the eastern coastal areas have better technical efficiency, and trust companies which have lower trust business proportion have greater technical efficiency.Further, this paper use technical efficiency as independent variables, performance of trust companies as dependent variables, and relevant indicators as control variables to build an empirical model to study the relationship with technical efficiency and performance. The results show that technical efficiency of trust and performances have great consistency in both two models which ROA and ROE as dependent variables respectively. That is improve technical efficiency will help improve performance. Therefore, trust companies should not only focus on expansion of the scale, while ignoring their own efficiencies. Furthermore, there is more significant positive correlation between size and performance.Finally, this paper summary conclusion and puts forward some recommendations based on the empirical analysis.