The Empirical Study Of Chinese Commercial Banks' Efficiency

Efficiency is one of the core problems that the economics deals with. It is also the goal that commercial banks chase in their business administration. The efficiency of banking is not only in the individual bank's performance and its competence, but also the reflection of the quality of the national economy development. The banking development depends on the efficiency in the long run, rather than the speed.At the very beginning, this paper interprets the basic meaning of the bank efficiency and the approaches applied in the researches: stochastic frontier approach, which is employed in this paper to estimate the efficiency in the Chinese commercial bank, and then review of some related researches on foreign or native banking, therefore, we point out that there are some shortcoming in the current domestic researches.We have estimated the inefficiency of each bank in 1999-2003, while the fixed assets and owners'equity are specified as outputs, pre-tax profit as inputs. The estimation result shows that the efficiency of the whole Chinese banking is rather low, and the average of the efficiency of the state-owned banks is lower than the private banks.Through our research of the influencing factors that influence that bank's efficiency, we find out that the foreign bank entry, capital adequacy,innovation,GDP growth, market concentration ratio have significant positive effect on the performance, while the property right structure has a negative relationship with the bank's performance, but it is not significant.Based on the conclusions above, the last part of the thesis gives some concrete advices on the improvement of the performance of Chinese commercial banks.