Research Of DEA Model In View Of Bad Output On Efficiency Of China’s Commercial Banks

Since China joined the WTO and the financial industry opened to the outside world step by step, especially after2007, foreign banks have been able to enjoy national treatment and most of them have been entering China’s financial service industry in forms of wholly foreign-funded banks. Along with the domestic business development of foreign banks, they are becoming an important part of China’s finance system and our bank industry is challenged by furious competition from them. But at the same time, the issue of commercial banks’efficiency is the key and core content for the resource allocation and development patterns transformation of current bank industry; therefore, our commercial banks have to improve their own management level and enhance their organizations’effectiveness.First of all, according the current situation of China’s development of commercial banks, this paper combs and summarizes the available multiple theories and methods and research literature, taking advantage of DEA(Data Envelopment Analysis) method with the addition of bad output, then estimates and judges the technical efficiency and scale efficiency of China’s13commercial banks while choosing the year from2002to2011as the model samples, after which, we find out that the progress of the whole bank industry is steady, the national banks outweigh other joint-equity commercial ones in terms of efficiency improvement, but the relative difference of total factor productivity between them is gradually narrowing.Secondly, using panel data, from multiple-dimensions perspective, this article runs a regression analysis of the influencing factors on efficiency, reaching that, based on the interaction strength affecting the bank’s effectiveness, the critical factors are the proportion of assets, non-performing loan ratio, innovation capability and resources allocation. Consequently, in the paper, the suggestions made specifically includes making scientific economy policies, deepening financial reform, governing operational environment for our commercial banks, further intensifying financial reform innovation, improving the risk management system of credit and focusing on prevention and control and resolvement of the non-performing loans.