The Empirical Research Of City Commercial Banks’ Cost Efficiency Based On Stochastic Frontier Approach (SFA)

The competitiveness of the city commercial bank is actual the efficiency.The high bank efficiency means the less investment for the fixed output or the fixed investment for the more output.Improving the efficiency of the city commercial bank is a key of the bank sustainable development, also is vital for raising the financial resource distribution.Cost control is the foundation of the bank efficiency.Therefore, the empirical study of the city commercial banks’cost efficiency is of great theoretical and practical significance.Firstly, the paper uses SFA to estimate the22China city commercial banks’cost efficiency from2006to2009.These samples are made of the original sample and the improved sample.The88groups of sample data is the original sample and the other88groups is the improved sample.The empirical study shows China city commercial banks ’cost efficiency of the improved sample is lower than the others.The city commercial banks’ cost efficiency is significantly negatively related to the non-performing loan ratio.Then, this paper studies on the regional city commercial banks’cost efficiency,this is a literature of the paper.Considering the bank scale and the property structure of the city commercial banks different, we use the regional city commercial banks to estimate the real regional city commercial banks’cost efficiency.The result shows, the east of the China city commercial banks’ cost efficiency is significantly higher than the other, the other regions’ city commercial banks’ cost efficiency are gradually increasing.Secondly, we estimate the aspects of the commercial banks’ cost efficiency using the panel econometric model.The study which shows the bank size and business innovation have positive effects on it,and the resource distribution and bank stability have negative impact on it, the property structure and asset quality are of not obvious influences. In addition, this paper also study the staff quality and so on totally three aspects.Finally, according to the empirical analysis, we provide effective suggestions about improving the commercial banks’ cost efficiency,which are increasing the technology application and business innovation, strengthening effective supervision and the other.