Study On Evaluation System Of Commercial Bank Core Competitiveness Based On Structural Equation Modeling

The latest China Banking Competitiveness Report shows that the Industrial and Commercial Bank of China, the China Construction Bank Corporation and the Bank of China are among the most profitable banks in the world. The competitiveness of China banking has progressed significantly in the recent years. However, as foreign banks are allowed to take part in the domestic banking market, domestic banks are facing more and more serious challenges. As the dominant part of the financial sector, the banking has an important role in a country’s economicartery, and consequently more and more scholars focus on the research of the core competitiveness of commercial banks. Although numerous studies have been reported, the evaluation of the core competitiveness of commercial banks is still an open question and needs to be addressed further.The major contents of the paper are as follows. First, based on the available studies and achievements of the predecessors, this paper tries to explore the factors that impact the core competitiveness of commercial banks from the Value Chain perspective, and then an evaluation system with solid theoretical foundation is set up on the base of the factors. Second, this paper introduces the Structure Equation Modeling into the evaluation of the core competitiveness of commercial banks, which is a fundamental innovation. Different from the traditional Factor Analysis, the Structure Modeling emphasizes that the model should be built on theoretical basis without ignoring intrinsic link between the variables. It makes an empirically reasonable hypothesis and then the hypothesis is verified by practical data, which is a totally verification based method and is more suitable for building an evaluating model. Third, twelve stock-listed commercial banks are selected and based on the related data from2007to2012, the core competitiveness evaluation model is established, which presents favorable fitting results. Finally, based on the further analysis of the current status of domestic commercial banks, this paper provides corresponding suggestions for the banks on how to improve the core competitiveness.