A Study On X-efficiency Of Chinese Commercial Banks

This paper is employed DEA model, a non-parametric method, to evaluate the efficiencies of Chinese commercial banking in 1998-2005 based on Bankscope database. These efficiencies include technical efficiency, pure technical efficiency, scale efficiency, allcocative efficiency and X-efficiency. In this paper, I select the Four big state-owned banks, Joint banks, City commercial banks, Rural commercial banks and Foreign banks as the sample banks. By which, at the first time the whole variety of the banks are involved into the studied targets. And also, I calculate these banks' efficiency scores based on Data Envelopment Analysis over the period 1998-2005, point out whether they are scale effective and technology effective, and provide some suggestions to help ineffective banks. Then, based on Tobit model I attempt to point out the main characters of efficiency banks and analyze the relation between efficiency scores and banks' characters. At last, I use Malmquist Index to find out the source of the productivity increase. Based on my study, I put forward the way to improve the efficiency of commercial banking.I have made some progress by learning the existing national and international achievements and the current data of Chinese economy. According to the accepted materials, there are three innovations in this paper. First, I select more banks as sample ones than the existing studies in China. Secondly, I employ DEA model, Tobit model and Malmquist Index to study X-efficiency of Chinese commercial banking over the period 1998-2005, point out the relationship between efficiency scores and banks' characters, and find out the source of banks' productivity. At last, I give some suggestions to improve efficiencies of those inefficiency banks. The main contents of this paper are as follow: The first chapter is the introduction. Here I talk about the background of this topic, pointing out the significance of study on the commercial banks', reviewing the national and international research on the banks'efficiency. Then I write about the the way of my research and the main innovations of this paper. Chapter 2 explains the concept of efficiency, commercial banks'efficiency and the commercial banks'X-efficiency, summarizing the main viewpoints of Marxism and modern Economics. In chapter 3, I compare the advantages and disadvantages of the parameter v.s non-parameter measurement. And then I introduce in details the non-parameter DEA models, including the foundational concepts of DEA models, the diagramming of DEA models and the description of linear programming, and the definition of input and output. In chapter 4, with the proper parameter of the input and output, the measure of DEA models is undertaken to analyze X-efficiency of Chinese commercial banking during 1998-2005, by which we find out the reasons of the banks'inefficiency. Chapter 5 analyses the factors of influencing Chinese commercial banks'efficiency by taking the second step of the two-step measure. And by using Malmquist Index, I find out the source of productivity. In the last chapter, I put forward three suggestions to improve X-efficiency for Chinese commercial banking.