An Research On Effect Of Joint-stock Banks’ Capital Structure On Business Performance Based On DEA

China’s commercial banks have made great progress, no matter in the asset size orprofit gains in recent years, which mainly depends on the difference between traditionaldeposit and lending interest rates. In July2013, as the People’s Bank of China announcedthe implementation of comprehensive deregulation on the lending interest rates, theprocess of market interest rates has been further promoted, and the difference betweentraditional deposit and lending interest rates has gone forever. The Third Plenary Session ofthe18th CPC Central Committee held in Beijing on November9th2013, decided to alloweligible private capital in accordance with the relevant laws and regulations to set up smalland medium-sized banks and other financial institutions under the premise of moreregulation. As more private banks have been established and local city commercial bankstend to operate cross-city, the competition of financial market will become even moreintense. Industrial and Commercial Bank of China, Construction Bank, Bank of China,Agricultural Bank of China, the former four state-owned banks have accomplishedshareholding system reform and listed one after another, combined with CITIC Bank andother12national joint-stock banks, and they have occupied the most share of the Chinesemarket. Studying how to optimize the rigid constraints of the capital structure to bankingoperations has great significance for the joint-stock banks to maintain their strongcompetitiveness in the fierce competition.Under the background of the above, this paper reviews a great deal of domestic andforeign research literature, and summarizes the existing academic achievements in the firstplace. Then this paper analyze the current situation of China’s joint-stock banks’ capitalstructure and operating performance, and describes the mechanism of the impact of capitalstructure on the operating performance from the perspective of ownership structure anddebt structure respectively, with the example of12national joint-stock banks. Finally, thispaper introduces the application of empirical model exhaustively, and carries on empiricalanalysis. This paper selects the sample data of twelve national joint-stock banks in2007-2012,and empirically studies the relationship between capital structure and operatingperformance by using data envelopment analysis (DEA). The research results demonstratethat the top five shareholders’ shareholding ratio from joint-stock banks show strongnegative correlation with bank operating efficiency, and capital adequacy ratio in the rangeof10%-11%range is helpful to promote the efficiency of bank. Also, the joint-stock bankswhose proportion of supplementary capital accounting for core capital in the range of30%-40%can achieve higher efficiency. Based on the research results, the paper givescorresponding recommendations to improve the operating performance of Chinesejoint-stock banks, including reducing the share of major shareholder, controlling properlythe capital adequacy ratio, increasing appropriately the proportion of supplementary capitaland the scale of investment in joint-stock banks.