Study On X-Efficiency Of Commercial Banks In China

Since China entered the WTO on 11th December 2001, it had passed five years'protecting period. China's banking sector was open to foreign banks from 11thDecember, 2006. As the global competition of banking sector is becoming severity, China's commercial banks would face the bigger shock which had never happened. Facing with the challenge and opportunity, China's banks must improve the management efficiency and the key power.Foreign scholars have started the research on the efficiency of banks for a long time. Chinese scholars also started to discuss the problem in recent years. The research theory on the efficiency of banks has been developed to X-efficiency theory from scope efficiency theory and the size efficiency theory. X-efficiency is also called management efficiency, Which was put forward by American economist named Leibentein(1966).The theory is about the low efficiency in the corporation. It is the summation of size efficiency and range efficiency, but different from them.This paper gives a study of X-efficiency by applying the Data Envelopment Analysis which is one kind of parametric frontier analysis. It isn't needed to estimate the production function and parameters by applying nonparametric methods. It base on the proportional variable and evaluate the efficiency of a section or a department. Data Envelopment Analysis, DEA, is a common and maturity method in nonparametric methods.This paper involves three parts: The first part gives details about X-efficiency theory of banks and decides to apply DEA method, through the compare of several research and analysis methods. The second part describes how to use DEA method to research the X-efficiency and calculates the pure technology efficiency, size efficiency, technology efficiency and X-efficiency of four banks owned by state and 11 joint-stock banks. After comparing commercial banks owned by state with joint-stock banks, we get several conclusions as follows: firstly our commercial banks had an average pure technology. Secondly the profit decreases when the size of commercial bank increases and the size efficiency of banks owned by state are lower than joint-stock banks. Thirdly, the allocative efficiency of commercial banks in China ascends in circulation. Lastly, the X-efficiency of commercial banks owned by state is lower than joint-stock banks except The Bank of China, and the X-efficiency of joint-stock banks has a promotion possibility. In the third part, I select the property structure, the ratio of non-interest income and total income, the ratio of interest income and deposit, capital adequacy ratios as the independence variable and have a regression analysis about X-efficiency of commercial banks.The result of regression analysis shows R-square statistic is 0.857433, and adjustment R-square statistic is 0.79069, D-W statistic shows that all variables have no self- correlation, and all variables have a good T-Statistic result except capital adequacy ratios, the F-Statistic is 13.53202,and it is a good result.The result give a conclusion that the property structure, the quality of loans, intermediary operation, capital adequacy ratios have a important influence on X efficiency of commercial banks. I find some problems in it and give some suggestions about it. This paper describes the situations of China's banks though the research about X-efficiency of commercial banks. Comparing with foreign maturity commercial banks, China's banks have a big gap. We must realize the shortage of our banks and improve the efficiency of China's bank.The innovations of this paper are that it selects the authority and new data analyze the efficiency of commercial banks though DEAP software. At the same time, I had tried to build a model about X-efficiency and have a regression analysis though Eviews6.0 software. The results of regression analysis reflect the real situation and coincide with the research of other domestic scholars. But the shortage of the paper is that I can find a rational and accurate model to describe X-efficiency of China's banks.The main aim of this paper is to arose the attention to the problems found in our analysis, seek an efficient method to solve these problems, improve total efficiency of banks and decrease the gap from the foreign banks.