China's Commercial Banks Competitiveness Evaluation

Foreign banks' entry into China with China's entry into the WTO has increased the competition among banks. By the later part of October, 2005, 71 foreign banks had established 238 institutions for business in China, and 22 foreign banks had become stakeholders of China's 17 banks. The summation of their investment has exceeded 16.5 billion dollars, which accounted for 15 percent of the total capital of the banks in China.Commercial banks in China faces the international banks and the foreign banks which are very strong and have mature management systems. Commercial Banks in China should keep their competitiveness and turn their competitiveness into profit ability, so it's very important to do the reseach on competitiveness appraisal of commercial banks and explore the way how to improve the competitiveness of commercial banks in China.The existing competitiveness appraisal approach of commercial banks has many defects such as the inadequateness of its index system, the severely subjective affect of its appraisal approach. So how to appraise the competitiveness of the domestic commercial banks scientifically is a big problem that demands prompt solution.This paper constructs the index system of the present competetiveness on the basis of the bank's "three characters"(namely profitability ,security and liquidity) and the index system of potential competitiveness with quantitive index. And it calculates the indexes' weights with Analytical hierarchy process(AHP).There is limited statistical data of the domestic Commercial banks and the data is gray.With no enough information,the system of the competitiveness appraisal of commercial banks is grey system.The grey relational process just have the information about the linear simulation of two groups of data ,but no information about the distance between the two groups of data.Taking the defect of the gray absolute relational process into account, we increase the distance item to improve the gray absolute relational process and establish the commercial bank competitiveness appraisal model with the improved approach.Using the model and the data of commercial banks in 2004, the paper demonstrates the competitiveness of the state-owned commercial banks and the joint-stock commercial banks.The result of the paper is similar to the result of the past scholars and evaluation organization's reseach.The result caters to the reality.And it shows that the competitiveness of the joint-stock commercial banks is better than that of the state-owned commercial banks, and the four state-owned commercial banks, among which the Construction Bank gets the first and the Agricultural Bank that did worst in competitiveness gets last. Among the joint-stock commercial banks, China Minsheng Bank, Evergrowing Bank, Industrial Bank and China Commercial Bank have relatively better present competitiveness and potential competitiveness.