Dynamic Evaluation Of The Competitiveness Of Commercial Banks Based On The Method Of Timing Of Global Principal Components Analvsis

As the financial markets are places that allocate social resources, economy can not develop well without advanced financial markets. If the financial markets are efficient, the social human and material resources will flow to the places of which the productivity is the highest. So, finance can be regarded as the core of Market Economy. Undoubtedly, banks are the most basic and important financial institutions in financial markets. And in China, commercial banks are in the dominant position in financial system, due to system reasons and historical reasons. As the foundation of the macroeconomic regulation and control, commercial banks have played an important role in the economic development and social stability of China. Thus, in China, the competitiveness for commercial banks can affect the economic and financial reform and development directly or indirectly.To improve Chinese commercial banks’competitiveness, three questions must be answered. What is the commercial banks’competitiveness? How to evaluate it? And how to improve it? In this paper, all discussions are around these three questions. Only defining the object, the research can have a clear aim. However, it is not enough to have qualitative study, it is necessary to have quantitative study as well, because the intensity of competitiveness for commercial banks is a relative concept. Thus an objective and feasible evaluation system, which is fit for definition, need to be set up. In the evaluation system, not only appropriate indicators are chosen, but also a scientific approach for giving weight to each indicator should be used. All of these make it possible to have a comprehensive datasheet which can represent the intensity of competitiveness for commercial banks.This paper takes the beginning by the enterprise competitiveness, because commercial banks are enterprises in essential. This paper reviews the origin and development of theories of enterprise competitiveness. Based on the achievements of scholars and research institutions both at home and abroad, the author thinks that a good enterprise should be an economic organization which can create value continuously, effectively and constantly increase it. So, enterprise competitiveness can be concluded as the ability to create value continuously, effectively and constantly increase it for stakeholder.Based on the comprehensive views of domestic scholars and combining with the definition of enterprise competitiveness above, the competitiveness for commercial banks is defined as the ability to create much more value for stakeholder, under the condition of current market economy. And commercial banks integrate internal and external resources, and then innovate financial products or services constantly, with guiding principles of safety, profitability and liquidity. In this definition, the condition of current market economy limits the specific time and space. The guiding principles show the principles of operation. As the efficiency that commercial banks integrate internal and external resources decides the efficiency of allocating social resources, integrating inside and outside resource emphasizes the banks’special status in society. Innovation is the intrinsic request for remaining competitiveness. And the aim of commercial banks’ existence and development is to create more value for stakeholder.After determining the research method, the key is to establish a scientific and reasonable indicator system for evaluating the results. To make sure the pertinence and maneuverability of research, and further pose reasonable suggestions, it is necessary to establish the indicator system. However, it is not possible to establish an indicator system which is absolutely objective and comprehensive. Then, this paper tries to establish an indicator system, which is on the basis of the definition of commercial banks’competitiveness above and from a viewpoint of banks’ managers. And the indicator system would show the core connotation and key characteristics of commercial banks’competitiveness. Also, it can make contribution to evaluate the competitiveness for commercial banks.Based on the definition above and CAMELS rating system, the Moodie rating system and the evaluation indicator system of the Banker Journal in China,17indicators are chosen. Most of these indicators are comprehensive and show the competitiveness for commercial banks in many ways. It shows that the attributes of competitiveness are not separate, but rather interpenetrated and interactional.With indicators set, it is necessary to choose a scientific approach for giving weight to each indicator. The time-serial generalization principal component analysis can not only realize the dimension reduction of raw data, make it easy to single out and tackle the principal contradiction, but also add the time-serial of indicators to dynamically evaluate competitiveness for commercial banks. This paper chooses sixteen listed banks in A share market and the time-serial generalization principal component analysis to conduct an empirical analysis. Using such method, five principal components are selected. Then according to the score of each principal component and the comprehensive score, this paper dominated the sixteen banks ranked for their performance in latest three years. After the empirical analysis, the empirical results are explained and relative policy suggestions are proposed.There are such novelties in this paper:Firstly, competitiveness for commercial banks is redefined. According to review the theories of enterprise competitiveness and summarize the achievements of related researches, this paper define the competitiveness for commercial banks in a wider perspective.Secondly, this paper sets up the indicator system on basis of the redefined competitiveness. The indicator system established includes the main indicators of CAMELS rating system, the three principles of bank’s operation, WEF and IMD evaluation system. In addition, some key indicators are added, to make the system much more complete. These indicators added are taken care of by employees, governments and customers.Finally, this paper uses the time-serial generalization principal component analysis. In the relevant researches, this method has not been used in evaluating competitiveness for commercial banks. This method is a principle component analysis which is added time-serial. It can observe the change of competitiveness with a relatively uniform standard, in a long term and a wide space.