Efficiency And Influencing Factors Study Of Cross-regional Operations Of City Commercial Banks

In China, city commercial banks are developed on the basis of the urban credit cooperatives, from the establishment of the beginning, the city commercial banks has developed rapidly, to the end of the last century has been more than5,000. However, with economic development, urban credit cooperatives gradually exposed many gaps in risk management, which has been unable to support the booming economic development, so at the end of last century, urban commercial banks was born. As a product of China’s special historical conditions, it can be said that the city commercial banks are the tools and means for the government departments to resolve the local financial risks, to rectify the urban credit cooperatives. At present, city commercial banks is not only the special group of our financial system, but also one of the most important parts, as of October2011, there was about137city commercial banks register under the management of the People’s Bank of China.In order to solve the problems of urban credit cooperatives, the State Council issued a "notice" on the formation of urban cooperative banks September7,1995, the decision on the basis of merging urban credit cooperatives since1995, at35cities set up by businesses, residents and local finance equity investment in batches of local joint-stock of urban cooperative banks, the history of the development of city commercial banks curtain is pulled from.In recent years, city commercial banks began to develop cross-regional business, so this context will research on this problem. First, starting from their research profiles, and analyzed the research results of the seniors at home and abroad. On cross-regional city commercial banks operating in our country, experienced a later quantitative analysis of the development process from the initial qualitative analysis. Qualitative researches around the following aspects expand:(1) What difficulties did city commercial banks face with in the process of cross-regional business?(2) If the implementation of the development of cross-regional merger and reorganization, mergers and acquisitions, and self-expansion such as vertical cross-regional business model, urban commercial banks how to proceed with the mode selection?(3) According to the analysis of existing models, the revelation of cross-regional development of city commercial banks.About the quantitative researches, the research of scholars mainly in analysis of the decomposition of the efficiency of urban commercial banks, as well as the contrast analysis among the state-owned banks, joint-stock banks, and the urban commercial banks scale efficiency. In recent years, research on factors affecting the efficiency of urban commercial banks began to emerge, scholars also did several empirical study on it by using different methods and models.The similar study abroad was mainly did in the United States, the study conclusion that the geographic diversification is good for the efficiency of the Community Bank.After summarize the research results at home and abroad, This paper reviews the history of cross-regional development of city commercial banks. After the CBRC clearly encourages city commercial banks to implement the cross-regional development strategy in2006, some city commercial banks began to accelerate the pace of cross-regional development. Immediately afterward, introduced the theoretical foundation and empirical research methods this paper used. From an economic point of view, city commercial banks chose to cross-regional operate mainly based on the consideration of two aspects, the economies of scale and scope economies. Empirical research on bank efficiency mainly used parameter method and non-parametric method. All these methods have advantages and disadvantages in the study, and data envelopment analysis is a commonly used analytical tool, which is also this article’s choose. Data envelopment analysis (DEA) include two models, the CCR model and the BCC model, CCR model assumes that banks constant returns to scale, while the BCC model assumes that bank returns to scale variable. BCC model obtained efficiency value corresponds to the case of variable returns to scale, pure technical efficiency of PTE, combination with the technical efficiency(TE) estimated by CCR model, and based on the formula technical efficiency (TE)=scale efficiency (SE)×pure technical efficiency (PTE), the bank’s scale efficiency values SE can be obtained. Through the decomposition of technical efficiency, you can know the specific reasons for the relative inefficiency. About the empirical analysis of the influencing factors of efficiency, this paper used censored model--Tobit model, chose this model is mainly due to the consideration of the data features of the dependent variable, using DEA methods to measure the efficiency value, the taking value interval (0,1], its means the data is only data fragments, if we direct use the ordinary least squares regression, the parameter estimated will be bias, and Tobit model can avoid such problems, so it’s an ideal model.Chapters IV and V of this article measure the value of cross-regional city commercial banks operating efficiency and its influencing factors. Sample selection has been implemented for the2008-2010panel data of19city commercial banks which operate cross-regional in and before2008. First it introduces the selection of inputs and outputs indicators and the reasons for it, and then measure the operational efficiency of the19sample city commercial banks. The conclusion is that the comprehensive efficiency of the city commercial banks from2008to2010is basically steady increase; cross-regional development strategy should not be blindly implemented, it should be considered according to their own circumstances; economies of scale is not necessarily exist in all urban commercial Bank, diseconomies of scale is also exist. In chapter5,it analysis the main influencing factors of cross-regional city commercial banks operating efficiency by regression analysis, the first is data stationary test, the test results indicate that the data is basically stable, which means the result of this article is true and reliable The results shows that:(1) the size of the city commercial banks negatively correlated with their comprehensive efficiency, but at the confidence level of10%, the correlation is not significantly;(2) city commercial banks non-performing loan ratio and its comprehensive efficiency of negative-related;(3) The regression results show ROE and the comprehensive efficiency of negative-related;(4) at10%confidence level, city commercial banks cross-regional extent and its comprehensive efficiency was significantly positively correlated;(5) Cost income ratio and operational efficiency of significantly negative correlation;(6) at the confidence level of10%, financial innovation and the comprehensive efficiency did not pass the significant test, the two are not related.The strategic objectives cross-regional operation to city commercial banks is the bank’s own decision-making problem but also a systemic issue. For banks themselves, the blind expansion may distort the its personalized, but if clearly market position is found, cross-regional development can promote the bank’s strategy of sustainable development. So at the end of the article, several recommendations was given:(1) in the process of city commercial banks development, cross-regional business should be seen as a long-term trends of its development, to consolidate their own local business and then to consider the operation of cross-regional. Cross-regional development of city commercial banks in the development process is to mitigate risks, to avoid the risk of regional economy, but this is only a long-term trend, in the short-term process, to be taken to avoid blind expansion, as the fourth chapter results are displayed, economies of scale is not applicable to all banks.(2) city commercial banks should avoided to use cross-regional development as a tool to blindly expand the size of loans, but should focus on the enhancement of the quality of loans. The rise in the NPL ratio is bound to improve the bank’s operational risk, but not conducive to the efficiency of the bank.(3) in the cross-regional development process, city commercial banks should continue to improve its ability of control costs. Either the short or long term, city commercial banks should ensure that the technical management level can match the speed of cross-regional development.(4) city commercial banks which has operated inter-regional, cross-regional degree is conducive to the comprehensive efficiency, therefore, it should be ramped up, construction and management of remote offices to improve their comprehensive strength, enhance their competitiveness.