Technical Efficiency Of Financial-Industrial Companies And Influencing Factors Based On Stochastic Frontier Approach

Integration of industry and finance is a hot issue in recent years in business. The research on the efficiency and its influencing factor of integration of industry and finance is gradually a new trend of theoretical research. The researchers are using efficiency measurement method rather than financial indicators. Based on the fact that integration of industry and finance is very important in corporate growth, industrial development and regional economy, this paper sums up the research method and theoretical model about technical efficiency, and then applies the method of stochastic frontier analysis (SFA) to measure technical efficiency of financial-industrial companies from listed manufacturing companies in China during2005-2011. On this basis, this paper analyzes the influencing factors of technical efficiency of integration of industry and finance from the financial-industrial companies’own conditions and external environment.The current research on efficiency of integration of industry and finance is relatively rare and few results have some deficiencies. First of all, putting forward to influencing factor of efficiency of integration of industry and finance is random and lacks of realistic bases and theoretical sources. Secondly, related researches only cover internal influencing factor of efficiency of integration of industry and finance, but seldom pay attention to external influencing factor of efficiency of integration of industry and finance. Finally, using SFA to evaluate efficiency of integration of industry and finance is not based on a particular industry. Evaluating efficiency of integration of industry and finance of many heterogeneous enterprises do not accord with theoretical hypotheses of this research method.At first, this paper reviews related papers on integration of industry and finance, defines integration of industry and finance of non-financial companies and confirms this paper’s research object, that is financial-industrial companies after listed manufacturing companies involving in financial institutions. This paper also reviews related researches on evaluation of technical efficiency and its influencing factor, defines the meaning of efficiency of integration of industry and finance and on this basis ascertains this paper’s research content, that is the efficiency and its influencing factor of integration of industry and finance. Then according to study, this paper uses stochastic frontier analysis (SFA) as the econometric model and illustrates its time-varying development by comparing with stochastic frontier analysis (SFA) and data envelope analysis (DEA). Afterwards, this paper constructs index system of input and output and comes up with seven possible influencing factors of efficiency of integration of industry and finance from reality and theory, including property right, enterprise size, financial risk, share proportion, type of financial institutions, support from government and support from bank. At last, using maximum likelihood estimation, this paper measures technical efficiency of financial-industrial companies and analyzes the influencing factors of technical efficiency of integration of industry and finance by SPSS17.0and FRONTIER4.1. Three main conclusions are drowned by this paper:1. The disparities of technical efficiency among listed financial-industrial companies in China are very big. The overall efficiency is not at a relatively high level and is severely affected by financial crisis. The technical efficiency of listed financial-industrial companies involving in bonding company and insurance company are higher, and the technical efficiency of listed financial-industrial companies involving in security company and trust company are lower. 2. For listed financial-industrial companies in China, promotion impact of capital input on output is obviously smaller than impact of labor input.3. Enterprise size, share proportion, financial risk, support from government and support from bank are the main influencing factors of efficiency of integration of industry and finance, while impact of property right on efficiency of integration of industry and finance is not significant. Impact of enterprise size and support from government on efficiency of integration of industry and finance are positive significant. Impact of financial risk, share proportion and support from bank on efficiency of integration of industry and finance are negative significant.