Comparative Study On Efficiency Of Chinese And Foreign Commercial Banks

As five years'buffer period after China's accession to WTO has ended, foreign banksenter Chinese market entirely. Foreign banks enter Chinese market directly by establishingbranches or enter indirectly by investing in Chinese-funded banks, thus they can participate inthe competition of bank industry. Therefore, Chinese-funded banks, especially, the fourstate-owned commercial banks, are in urgent need of improving operating efficiency andstrengthening their competitive power by deepening reform. While, banking efficiency is animportant standard of sustained, healthy and stable development of the commercial banks.This is also the reason the thesis comes out.We can find out the margin by comparatively studying on the efficiency of the Chineseand foreign commercial banks operated in different systems. Chinese-funded banks studiedinclude the four state-owned commercial banks (the Industrial and Commercial Bank, theAgricultural Bank, Bank of China and Construction Bank), the Bank of Communications andChina Merchants Bank. Foreign-funded banks that have been studied contain National CityBank of New York, JP Morgan Chase and the Bank of East Asia. Firstly, we can measure theefficiency rating values of the commercial banks by using the methods of DEA and SFA.Then, we investigate the indices of the technique efficiency, cost efficiency, allocationefficiency, scale efficiency and other efficiency of these nine commercial banks separately.By making further investigation into the influencing factors that determine the efficiencychanges of the commercial banks and using the fixed effects model and the random effectsmodel to do panel-date regression analysis of the nine commercial banks, this paper canprovide theory support for analyzing the factors that influences banking efficiency and givepolicy recommendations. Through positive analysis, this paper obtains to a series conclusion.1, The measure result indicates that the efficiency of Chinese-funded banks is greatlyraised, while it legs behind foreign-funded banks.2, This paper analyses the micro-characteristics of banking efficiency by making costefficiency which is measured by SFA as variable, eliminating those factors which have nosignificant effects on the banking efficiency and choosing economic growth, rate of inflation,ownership characteristic, the scale of banks, market competition degrees and price of capitalthese six factors in positive analysis. It turns out that economic growth, rate of inflation andprice of capital take active effect for improving banking efficiency. However, scale of banks,ownership characteristic and market competition degrees have contrary effects betweenChinese-funded banks and foreign-funded banks.3, According to the result of positive analysis, as far as the author is concerned, banks,especially the Chinese-funded banks, should improve the ability to control their sizes, response to market competition, perfect ownership, expand the scope of economy, enhance theability of risk resistance and enlarge intermediate business.