Efficiency Analysis Of Inter-regional Operations Of City Commercial Banks

More than nine years after China's entrance into WTO, the Chinese financial industry has been fully opened. With the influx of foreign banks, large state-owned banks and national commercial banks continue to grow, a variety of loan companies, rural banks and other new financial institutions in large numbers, and China's financial industry survival in an increasingly competitive environment, survival and development of city commercial banks face unprecedented opportunities and challenges. After eliminating high-risk of the Urban credit cooperativeness, China's city commercial banks improved the market position——"services the local economy, services the small and medium enterprises and services urban residents". They successfully financial support for SMEs, pave the way for the local economy, make up deficiency of specialized state banks, and make urban financial services system multi-level. Besides state-owned commercial banks and shareholding banks, city commercial banks become the major component and special groups of the banking industry.City commercial banks took three major means to promote their growth and development——inter-regional operation, attracting foreign investment and public listing. Inter-regional operation is the main tool commonly used. Early inter-regional operation of city commercial banks is to defuse the risk and experience the administrative intervention period. Now they focus on the role of market. City commercial banks establish their inter-regional network in their province, in their economic circle or nationwide. In the actual development process, on the one hand, cross-regional business can really stable sources of deposits, expanding business, spread the risks of banks, which create favorable conditions for those large city commercial banks which want to grow into national commercial bank. On the other hand, the lower part in the overall quality and management instruments, risk management and talent pool which also do not have the strength blindly follow the trend, showing a serious expansion of the blindness and lack of market positioning. This part of the banks' market position develop into the other direction, lack careful analysis of objective business environment and their own special conditions and rigorous scientific market segments. All of these conflicts with "service the local economy, services for SMEs and urban services" market positioning.The main purpose of this paper is to discuss relation between China's city commercial banks'inter-regional operation and banks operating efficiency. The paper chooses 20 banks to be samples which have begun their inter-regional operation since 2007 or more earlier. The data envelopment analyze (DEA) estimates bank efficiency changes from 2007 to 2009,bank efficiency and asset scale changes show the reverse relationship. Various factors effecting bank efficiency were discussed through Regression technique, and the result was also that inter-regional operation did not improve bank efficiency.