Research Of Chinese Commercial Bank Efficiency Using Data Envelopment Analysis

Efficiency is the core problem that the economics deals with.It is the important 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 intrinsic quality of the national economy development.The banking development also depends on the efficiency in thelong run.After the entry to WTO,Chinese banking will be confronted with more fierce competitions between native and foreign banks.So it is meaningful in the theory and practice to do some work on the efficiency of Chinese banking and the influencing factors.After the review of some related researches on foreign and native banking,this paper inteprets the basic meaning and the calculating approaches of the bank efficiency.With the analysis and comparison of these approaches and analysing the basic situation of Chinese banking,data envelopment analysis approach is employed in this paper to estimate the technical efficiency,scale efficiency and pure technical efficiency of 14 commercial banks in 1998～2006 by using CRS and VRS model.Redefine the input and output indicators,compare the efficiency of the state-owned bank with share-hold bank as a whole,and analyze the difference between the banks from the horizontal view,and also the annual comparision within the banks from the vertical view.Then,the factors which influence the efficiency of commercial banks are investigated by regression.The dependent variable is bank technical efficiency by VRS model,and the independent variables are the bank microscopic feature variables.The results of regression demonstrate that the proportion of intermediary business income has positive correlation coefficient with bank efficiency significantly,while the asset scale has negative coefficient.The capital adequacy has positive effect on the efficiency in stated-owned banks significantly,while the relation of the asset scale and the efficiency of stated-owned banks isn't significant.But the asset scale has positive correlation cofficient with share-hold banks(at the 15%significant level ).Based on the above analysis,this paper proposes some possible ways which can improve the efficiency of chinese commercial banks.