Study On Chinese Trust Company’s Profit Efficiency

Trust industry originated from ancient Greece, until now, it has been one of thefour big financial industries. Scholars at home and abroad have done a lot of researchon trust industry, but few on the profit efficiency of Chinese trust industry.SFA isapplied in this paper to research on the profit efficiency of Chinese trust industrywhich is meaningful. There are five parts in this paper.The first chapter focuses on the significance of the topic, and instruction of therelated papers in home and abroad, research ideas, innovation of the article.The second chapter describes the basic theory of trust and efficiency, thesituation of the trust market in our country, as well as the influencing factors. Theessence of trust is to help the client achieve some purpose, such as to obtain benefits.Efficiency is rooted in the scarcity of resources. This article focuses on themicroeconomic efficiency which is minimized costs or maximized outputs. Theprofit efficiency refers to the degree of how an economic unit profit level close to theoptimal level of profits in the industry in the case of certain inputs and outputs. Trustbusiness in China become prosperous in the five years from2007to2011. The trustindustry is developing rapidly, and following trends have showed up gradually: TrustCompany’s capital and trust scale have expanded constantly. Product structurechanges time by time. Relevant laws and regulations are improved gradually.The third chapter introduces SFA models and two production functions.The forth chapter is about empirical research. Thirty trust companies areselected, from2007to2011in this paper. In terms of profit efficiency, SFA model in1992and beyond logarithmic form of the production function are selected. Theresults showed that the five-year average profit efficiency of30trust companies is 0.530, which means the overall profit of the trust industry is not high. Anotherconclusion is that the average profit efficiency of different trust company has a bigdifference. Zhonghai Trust has the highest value, which is0.780, the lowest is JilinTrust, which is0.292. In terms of influencing factors, some factors is proportional tothe profit efficiency such as the quality of human capital, the efforts on the mainbusiness, the level of profitability, the market-oriented company management.However, innovation capability has little effect on the trust profit efficiency. Thereason maybe is the sample selected or trust products designed.The last chapter is about summary and recommendations. There are severalways can be used in improving the profit efficiency of trust industry, such ascultivating professional talents, changing the company management, producing newtrust products which are needed, cultivating the public‘s financial managementthought.There are theoretical and empirical research about efficiency and influencingfactors of our trust company in this paper. I hope it will be helpful for futureresearch.