The Analysis Of Commercial Banks’ Efficiency Based On DEA

Efficiency is the main content of the field of research in commercial banks. High efficiency can not only enhance banks’ competitiveness and improve economic benefits, but also be able to improve the development of the national economy. Therefore, the efficiency is crucial to commercial banks. In this paper, the respect for the facts, more scientific variables selected and the analysis of input relaxation are all innovations. The author pays attention to the efficiency of China’s commercial banks and the influential factors of it. So it has a certain referenced value.Firstly, the author summarizes the background and significance of this research, and the definition of bank efficiency and its literatures. Then the author talks about the calculation methods of the efficiency of commercial banks in two categories—traditional methods and modern methods. The author selects the data envelopment analysis (DEA) to analyze the efficiency of commercial banks in China. The input indicators of the DEA model are net fixed assets, operating expenses and labor, and the output indicators of the DEA model are net income and loan-to-deposit ratio. The author uses the relevant data of China’s major commercial banks from1985to2011and the two different models of DEA, the CCR model and the BCC model, to analyze the technical efficiency, the pure technical efficiency and the scale efficiency of16commercial banks in China. National commercial banks and other joint-stock commercial banks are analyzed differently. Then put them together and make a summary. The analysis shows that the average technical efficiency of national commercial banks is lower than that of other joint-stock commercial banks. However, the average scale efficiency of national commercial banks gradually catches up with the average scale efficiency of other joint-stock commercial banks, or even more than it. It can be confirmed that the main reason this phenomenon happens is the leading role of the scale of the efficiency. Joint-stock reform has a great role in promoting the efficiency of China’s national banks. The special events of other joint-stock commercial banks are also important reasons of affecting efficiency. Based on the analysis of input relaxation, the author finds that the over-investment of net fixed assets and labor lead to technical inefficiency in commercial banks. Although operating expenses are invested redundantly, it is not the major input factors that affect the technical efficiency of commercial banks.In addition, based on the DEA model, the author uses the regression analysis on the influential factors of the efficiency of Chinese commercial banks in the reality. The dependent variable is the pure technical efficiency and independent variables are total assets, capital adequacy ratio, the structure of property rights, net profit margin, the balance of loans per capita, the balance of deposits per capita, expense ratio, intermediate business income and market share. The result shows that the influential factors of the efficiency of Chinese commercial banks are bank size, capital adequacy ratio, the structure of property rights, management levels and intermediate business income. Large-scale, nationalized properties and higher expense ratio will reduce the efficiency of the bank. Adequate capital, more per capita deposits balance and more intermediate business income can increase the bank’s efficiency.In face of the efficiency situation of commercial banks in China, the author presents a few suggestions, such as promoting technological progress, improving the utilization of resources, reducing operating expenses, improving the management levels, taking advantages of economies of scale, adjusting the structure of property rights, establishing market mechanisms and strengthening supervision.