Estimating The Technical And Scale Efficiency Of China Banks

This paper uses data envelopment analysis(DEA) to investigate the efficiency of the China banking industry over the period 2004-2007.Our results indicate that the inclusion of loan loss provisions as an input increases the efficiency scores, but off-balance sheet items do not have a significant impact. The differences between the efficiency scores obtained through the profit-oriented and the intermediation approaches are in general small. Banks that have expanded their operations abroad appear to be more technical efficient than those operating only at a national level. Higher capitalization, loan activity, and market power increase the efficiency of banks. The number of branches has a positive and significant impact on efficiency, but the number of ATMs does not. The results are mixed with respect to variables indicating whether the banks are operating abroad through subsidiaries or branches.Finally (Bank of China) projected regarding the sample bank has analyzed the investment essential factor and delivers the essential factor the redundancy, analyzed the bank the financial characteristic and reflects the bank strategic decision the variable. The Bank of China is relatively low regarding these two investment essential factor’s use factor, is unable to achieve the resources reasonable disposition the situation, is somewhat low regarding the labor force use, but reflected indirectly present Chinese Banking industry universal situation, namely organizations and agencies huge complex, the department job category overlaps the confusion, the superfluous personnel to be serious.