The Competitiveness Of China's State-Owned Commercial Banks

The purpose of this paper is to estimate competitiveness of Chinese state-owned commercial banks. Especially, I estimate technical efficiency, scale efficiency, and pure technical efficiency by 2 inputs and 2 outputs of Chinese state-owned commercial banks. Depending on the non-parametric method (DEA), I estimate technical efficiency using inputs and outputs of 13 Chinese commercial banks. The average technical efficiency of total banks under constant return to scale is 0.72 in 2008. The empirical results show that inefficiency has much more to do with the scale of production rather than the inefficient utilization of resources. The banks under decreasing return to scale occupy almost 60percent (8 banks out of 13 banks) of total banks, implying those should reduce their production scale. This evidence is more obvious in state owned banks.