Research On The Efficiency Of China Merchants Bank Based On Data Envelopment Analysis

In the environment of economic globalization and financial liberalization, the influence of international financial crisis expands it's scope and deeps it's extent. With state-owned banks'market structure reform advancement, small and medium-sized city commercial banks rise and the cooperatives and shareholding commercial banks' internal management system consummation, the competition of domestic banking becomes increasingly fierce. Furthermore,Chinese financial market are wholly open for foreign banks which can enjoy national treatment after China entered into WTO,which further intensifies competition between domestic banks. Facing the impact of the financial crisis, the complex external environment and fierce competition of the banking industry, as the earliest marketization commercial bank in China, whether China Merchants Bank can raise the efficiency and enhance its itself, is related to it's competitiveness of survival in the fierce competition. Empirical research on the efficiency of a single commercial bank in innovative use of data envelopment analysis (DEA), which not only has practical significance for improving the efficiency of China Merchants Bank but also provides reference for other banks to improve their efficiency.Primary problem of increasing bank efficiency is evaluating bank efficiency scientificly and accurately. At present, there are many methods of bank efficiency evaluation. Nevertheless, data envelopment analysis (DEA) is one of the more advanced and mature methods, especially for efficiency evaluation of banks with the many investment - outputs characteristics. The purpose of this paper is empirical analysis on the efficiency of China Merchants Bank in use of DEA . Then using quantitative analysis by combining regression model to determine the influence factors and their influence degree to the efficiency of China Merchants Bank.At last, based on the conclusions mentioned before, puting forward the improvement measures in oder to improve the efficiency of China Merchants Bank.To achieve the objective, this paper made below four parts work:First, based on synthetic introduces of literature review, this paper briefly summarizes the related the concept of efficiency and introduces the development of data envelopment analysis (DEA) and the models that will be used later,including C2R model, C2GS2 model and super efficiency model. Secondly, based on summing up predecessors' experience, combining with the actual situation in our country, the paper chooses appropriate input and output index systems.Then the paper empirically research efficiency of ten banks in 2006-2009 by using method of DEA from operation ablitity, profitability and sustainable growth capacity three aspects in the first; and then calculates by using super efficiency model and ranks the DEA efficiency value to laterally analyze the gap between the efficiency of China Merchants Bank and other Banks' efficiency in the same year, and the reasons. Then, the paper uses the same method to empirically research efficiency of China Merchants Bank in 2000-2009 and longitudinally analyzes the development trends and characteristics of China Merchants Bank, which will be the important basis of regression analysis and to make sure which factors affect the efficiency.Then the paper does regression analysis by using ultra-efficient value of China Merchants Bank in 2000-2009 as explained variables and using asset scale, asset quality, asset allocation, middle business income and capital adequacy ratio as explanatory variables. According to the regression results, the paper makes the conclusion that: bank scale, asset allocation (deposit-loan ratio), asset quality are positively correlated to the efficiency of China Merchants Bank,but intermediary business income, capital adequacy are negatively correlation with bank efficiency.At last, according to the empirical research and regression analysis results, and combining with actual situation of China Merchants Bank, the paper proposed some improvement measures:moderately expanding bank scale and realizing the scale benefits; reforming the credit business organization setup, improving credit management system, reducing the bad loans, and strictly controlling the bank asset quality; building optimal asset structure, raising bank asset allocation ability,and guaranteeing bank assets of safety, liquidity and profitability; strengthening the intermediary business innovation, and expanding middle business income proportion.