An Empirical Study On X-Efficiency Of Commercial Banks In China

With the development of the globalization and integration of the economy, the global economy links more closely. The financial crisis caused by the sub-prime crisis has evolved into the global financial crisis, the world economy appears obvious recession with the spread from the financial crisis to the real economy, the economic growth in China tends to slow down. Therefore, how to improve the ability of the modern financial institutions especially the banking system in keeping away and resolving the financial risk in order to promote the growth of the economy attracts extensive attention. The finance is the core of the economy, and the bank is the most important part of the financial system. the sustainable,healthy and stable development of the banking industry not only influences the economic development of a country, but also relates to the Country's financial safety and the social stability. While the efficiency is just the important standards of sustainable development of the banks, this is also the reason choosing the topic.The management institution of the commercial banks is not perfect because our country stays in the important transition time from the planned economy to the market-oriented economy. As the by-products of the institutional transformation, the commercial banks especially the four state-owned banks accumulate plenty of non-performing loans. Although the balance and the rate of the NPLs tends to decline in recent years, the amount of the NPLs is very huge because of the enormous assets scale of the commercial banks. The NPLs problem relates to the management risk of the commercial banks tightly, therefore, the problem of NPLs could not be neglected. This paper uses the rate of the NPLs to measure the management risk, make research on the X-efficiency considering the management risk and make comparisons with not considering the management risk in order to reach some inspirations. The banking industry is an industry managing risk, therefore, the study on X-efficiency of banks from the perspective of considering the management risk has more realistic sense.This paper draws lessons from X-efficiency theory of Leibenstein(1966) and use SFA from two angles of the profit and cost to measure the X-efficiency of the commercial banks on the basis of teasing the related research articles. In addition, this paper.makes comparisons by ownership, the scale and analyzes the factors influencing the X-efficiency, finally, supplies some suggestions on how to improve the X-efficiency according to the empirical results. This paper makes conclusions as follows by empirical research:1 .After considering the management risk, the average profit efficiency and cost efficiency of 15 commercial banks every year from 2000 to 2004 tend to rise compared to not consider the management risk. After considering the management risk, most of the banks' rankings get changed.2.The scale, the compete extent and the entrance of foreign banks have positive effects on improving the X-efficiency, however, the capital structure, the economy growth rate,CPI,the state ownership, the duration time and the financial deepening extent make restraint effects. When considering the management risk, the role of restraining the improving of the profit efficiency of the economy growth rate,CPI and the financial deepening extent has improved comparing to not consider the management risk, but the effects of the capital structure,CPI and the financial deepening extent on the cost efficiency have little change.