Efficiency Study Of China Commercial Bank

The commitment of ending the protection of the domestic banks in December 2006 when our country takes part in WTO makes an increasingly fierce market environment for domestic commercial banks. How to improve the efficiency levels in order to achieve long-term development is the most important issue for China's commercial banks. This paper uses statistical and mathematical theory and brings grey relation analysis into the efficiency study based on the summary of in and out research about commercial bank efficiency evaluation model, theory. The first innovation of the model lies in building ideal commercial banks, calculating the relational extend between the appraisal commercial banks and ideal commercial banks. Secondly, the representative bank is chosen, by applying, principal component analysis and gray relational advantage analysis, to find the extent between every index and synthetically score. By means of computing synthesis relational extent, index weights are obtained, avoiding the more subjective weakness of former researches. The model chooses 5 bank efficiency evaluation indexes such as profit ability, expense control ability, risk control and security, development ability, asset deploy. Through the analysis of those financial data of 9 banks include 3 state-owned banks from 1999 to 2006, it gets factors affect our commercial banks and rank those banks efficiency. The result proves that state-owned banks are lower than other banks; net returns on equity, ratio of nonperforming loans are the two main factors affect bank efficiency.