Research On China's Listed Commercial Banks' X-efficiency, Based On The Three-stage Dea Model

The commercial bank has dominated our financial system for a long time. At 2003, our banking system reformed. Four state-owned commercial banks successfully listed, thus setting off a listing climax of the commercial banks. In addition, China's banking market is fully open to foreign financial institutions since the end of 2006. From then, commercial banks lose national policies'protection, and have to compete with foreign financial institutions equally, facing unprecedented competitive pressures. The listed commercial banks are very dynamic, which make them become the representative of China's banking sector. And moreover, the characteristics of X-efficiency deserve a considerable interest and research.This paper employs the three-stage DEA model to investigate X-efficiency of listed commercial banks, and can be divided to five chapters.1. Introduction. This chapter briefly introduces the background information, the objectives, and the concept of X-efficiency of commercial banks. Also, it reviews the relevant papers, concludes the research contents and methods, and finally suggests the innovations and weaknesses.2. The choice of evaluation method and model of X-efficiency. The frontier efficiency analysis method is commonly used internationally to evaluate the X-efficiency of commercial banks. According to whether it is necessary to estimate the specific form of frontier production function, we define parametric method when necessary, and non-parametric method when not. As to the kind of decision making units of commercial banks, it is difficult to obtain frontier production function required by parametric method through modeling. The non-parametric method is preferred as the parametric method is not suitable in this case. In non-parametric method, DEA does not need presumption of the specific form of frontier production function, and can be used to evaluate the X-efficiency of the commercial banks. The traditional DEA model ignores the environmental effects and statistical noises, therefore causing a certain deviation. However, the three-stage DEA model solves this problem and thus will be employed in this paper.3. The choice of variables in the model. Using production approach and intermediation approach, we employ personnel expenses, net fixed assets, deposits as the input; and utilize net loans, non-interest revenue as the output. According to the condition of the sample banks, we choose actual GDP growth, deposit share, listing condition and number of branches as the environmental variables.4. Empirical analysis. Three-stage DEA model has 3 stages. The first stage uses the traditional DEA model to measure the X-efficiency, and then calculate the difference. In the second stage, the SFA model is applied to analyze the environmental effects and statistical noises, after that, the original input is revised with the reference of the SFA's result. The third stage again employs the traditional DEA model to measure the X-efficiency using the revised input and original output. According to the analysis, we conclude four points:(1) the efficiency has a clear difference between the first and third stage, therefore the environmental effects take a considerable impact to the efficiency; (2) the overall X-efficiency of our listed commercial banks is increasing every year, in that, the state-owned banks have a faster increasing rate than the joint-stock banks; (3) the improvement of X-efficiency for joint-stock banks is not very clear; (4) in the duration of sample, the change of X-efficiency mainly comes from allocation efficiency.5. Suggestions. According to conclusions of case analyzing and the status of China's banking industry, this paper gives several feasible policy suggestions. They are: (1) To promote joint-stock reform and improve corporate governance of commercial banks; (2) To adjust operational structure and expand commercial banks'profiting channels; (3) To try mixed operation and develop financial holding companies.