Efficiency Of Chinese Commercial Banks And Their Impact On The Bank Stock Returns

Along with the further deepening of the reform of China’s financial system,commercial banks are facing increasingly fierce competition, while the Bank’s operatingefficiency is not only the core competitiveness of commercial banks, but also theembodiment of comprehensive competitive power of commercial banks and related to theBank’s own long-term development, what’s more, it also affects the allocation of financialresources in China and plays a important role on China’s macro-economy developingsmoothly. In addition, in the context of China’s economic slowdown, commercial banksshould pay more attention to their operating efficiency. Therefore, research on theefficiency of Chinese commercial banks and exploring the relationship between efficiencyand equity income have important theoretical and practical significance.In the above context, this paper reviews the research on a large amount of domesticand foreign literature, baseing on the summary of existing research results of the level ofefficiency, uses the non-parametric method to study efficiency of commercial banks inChina, and tests the relationship between efficiency and stock returns by performing aregression analysis. First, explaining research background and significance, researchmentality and research methods, secondly, recalling combed through commercial banksefficiency of connotations, the methods of evaluation, and study of the relations betweenstock returns and efficiency et al, thirdly, calculating the operating efficiency ofcommercial banks in China. Pursuant to panel data of13listed commercial banks from2006to2012, measuring efficiency of Banks by both DEA model and super efficiencyDEA model, empirical results indicates that commercial banks overall efficiency levelremains to be improved, efficiency of joint-stock commercial banks is superior to Statecommercial banks; then, testing commercial banks’ efficiency and stock behavior basingon efficiency measured by super efficiency DEA model, results confirmed that there is asignificant positive correlation between efficiency and stock return, however the regression coefficient is low, indicating that the effectiveness of China’s stock marketneeds to be enhanced, finally, summarizing the conclusions of the full text and to putfoward relevant policy recommendations.