Efficiency Measure On China’s Trust Industry And Empirical Analysis On Its Main Influencing Factors

As one of the four pillars of the financial industry, after6times’consolidation, trust industry nails down its main business and takes fulladvantages of its ability across the capital markets, the physical market andmoney market. Therefore, trust industry has entered a rapid growth path since2007; it has the rapid expansion of asset size, excellent personnel, and colorfulproduct innovation. At the same time, there also has internal polarization ofthe industry. Improving the efficiency of a trust company is the key to developthe trust industry, but also the effective way to survive the fierce competitionin the industry. Therefore, to measure the efficiency of a trust company andquantify the main factors is good for guiding a company to improve operatingconditions, and also helpful for the financial regulators.After sorting out the trust theory and the efficiency of financialinstitutions at home and abroad, combined with the operating status of thetrust industry in China, this paper divides the trust company into five majorcategories according to the controlling shareholder. Choosing49continuingoperation’s trust companies as samples from2007to2010, this paper use theDEA method to measure the companies’ technical efficiency, scale efficiencyand cost efficiency. The results show that China’s Financial Group HoldingsTrust Company has a higher efficiency, but state-owned enterprises’ efficiencyis significantly lower. Polarization has a widening trend.In order to investigate the factors affecting the efficiency of the trustindustry, based on the micro level, the paper uses panel data to do multiplelinear regressions. The empirical research shows that talent quality, asset size,earnings have a significant positive effect on the efficiency, while themanagement expense has a negative impact on efficiency. In the end, combined macro-level with meso-level, this paper offers some correspondingrecommendations to improve the efficiency of China’s trust industry, includingthe maturity of the social credit system, strengthen the supervision of theindustry, optimize the governance structure of the corporate.