The Pareto Efficiency Analysis To The Commercial Banks’ High Profit In China

The impact of financial crisis on the banking industry is double-edged, not exceptional on China banking industry. There are both opportunities and challenges, but it seems that opportunity is greater than the challenge to the China banking industry, because in the circumstance of global finance crisis, only the China financial industry still maintained higher growth ability. The high profit performance of commercial banks in China made the Chinese financial industry outstanding in the global financial industry. However, precisely this strange phenomenon has caused numerous scholars concerning on China commercial bank profit efficiency.This paper took the Chinese commercial bank profit efficiency as the research object, on the basis of carding and classifying the domestic and international research, used the stochastic frontier method (SFA) to build a logarithmic function model which content commercial bank capital price, price of human capital, the loan and non interest income as input variables and output variables. Then through the FRONTIER4.1software, we got the commercial banks profits Pareto static efficiency, at the same time we used the Malmquist index profit to analyze the dynamic efficiency. Through the quantitative analysis we draw some conclusions:First, there is a big gap between the commercial bank profit efficiency and profits; Second, due to different structures the commercial bank profit efficiency exists bigger difference; Third, although the overall level of efficiency rise, there is a certain leakage compared to the optimal level. Through the further analysis the paper found that commercial banks have three aspects to support its high profits:the first one is the market structure. The banks, rely on monopoly position and unopened market, have access to facilities and protection, which reflects the protection efficiency of the market structure; The second is the profit pattern, the spread of rate and scale protection ensure the banks high profit, which embodies the model efficiency; The third is the speculative factor. When facing policy constraints, the bank use the lag of the financial supervision to get a high profit. That is the speculative efficiency. However, the process of financial globalization and interest rate liberalization make the commercial bank in a changing financial market environment, these support factors will not be sustainable, and there are some problems in the commercial banks efficiency caused by the high profit. Therefore this paper proposes the corresponding countermeasure to realize commercial bank profit Pareto efficiency improvement,from the aspects of changing profit pattern, improving internationalization development, strengthening the service quality, and perfecting the risk mechanism.