| After the implementation of the reform and opening up policy, Chinese financial industry has opened to the outside world in a deeper level gradually. Foreign banks entering Chinese market leads to much more intense competition to different types of banks, regardless of five state-owned commercial banks, joint-equity commercial banks, city commercial banks or rural commercial banks. Under this situation, transformation and upgrading, introduction of strategic investors, going public and internationalized development measures have been adopted by large-scale commercial banks. According to their own development characteristics and resource superiority, small regional banks put forward trans-regional development, merger and reorganization strategies and so on. For Chinese banking which is in the process of transformation development, improving commercial banks’ international competitiveness is crucial to financial industry’s sustainable development. Performance is the important manifestation of a bank’s competitiveness. After China entered WTO, Chinese financial industry’s marketing degree is deepening. And deposit insurance system is the significant milestone for interest rate liberalization. Narrow deposit-to-loan spreads will bring impacts on financial market to some degree, especially for small and medium banks in the banking industry. How to cope with opportunities and challenges generating in this reform is vital for the future development of Chinese city commercial banks.Performance is the representation of general strength for a commercial bank. However, performance is an indicator which is hard to be measured. Instead of a series of complex data indexes, this article uses a few of effective indicators which can be measured and are mutual independent by means of multifactor dimensionality reduction. The performance of fifteen members of Shandong City Commercial Banks Alliance and of six well-developed large-scale city commercial banks are investigated. We find that Shandong city commercial banks’ performance influence factors can be divided into four aspects:development and growth ability, risk resisting ability, profitability and assets management ability. Besides, the latter six ones’ performance is obviously better than the prior fifteen ones’ performance. This is because large-scale properties and rigorous operation and management bring positive influence on city commercial banks’performance. Adding six city commercial banks affects sample data’ structural feature. From the perspective of factorial analysis results, "Profitability Factor" rises to the first one in the model of twenty-one banks from the third one in the model of fifteen banks. What’s more, the six large-scale city commercial banks’ profitability power ranks top six places. "Development and Growth Factor" and "Risk Resisting Factor" fall to the second and third one in the model of twenty-one banks from the first and second one in the model of fifteen banks. This shows that stable economic environment makes city commercial banks grow rapidly and stringent regulatory policies improve the risk resisting ability of small and medium banks. But compared with large-scale city commercial banks, small and medium city commercial banks are still some way to go in the matter of profitability capacity. Therefore, a key conclusion of this article is that there is a distinct gap between Shandong city commercial banks’ performance and large-scale city commercial banks’ performance. And this gap is mainly reflected in the profitability capacity.In addition, we find that city commercial banks’performance scores have great correlation in asset size. A few of banks with small asset size rank in the last. However, with asset size increasing, the correlation between performance and asset size is weakening step by step, which is because the trend of scale merit among city commercial banks is slowing down. For instance, comprehensive performance score of Weihai City Commercial Bank is higher than that of Bank of Beijing which has a multiple of thirteen asset size than Weihai City Commercial Bank. Amongst six well-developed large-scale city commercial banks, we find that comprehensive performance scores of Huishang Bank, Bank of Nanjing and Bank of Jiangsu are higher than those of Bank of Beijing and those of Bank of Shanghai, but the asset size of the prior three banks is smaller than the latter two banks’. Upon closer inspection, according to Wang Juntan (2013), a possible explanation is that a city commercial bank’s expansion exceeding its optimal scale may produce phenomenon of uneconomical scale. |
