Empirical Research On The Relationship Between Chinese Commercial Bank Market Structure And Efficiency

After the subprime mortgage crisis in2008, financial circles in many countriesbegan to pay attention to not only risk prevention but also the management of thebank. In the long term, Chinese state-owned bank maintained its monopoly position.In the meantime, government and central bank in China replace the commercialbank make economic decisions through a variety of planning and administrativeinstructions. These lead to the irrational economic choice of commercial banks andthe non-optimal allocation of resources. The bank’s abilities of management andallocation are the key to realize the bank efficiency. In addition to researching themarket structure and influence factors of commercial banks, research on therelationship between bank market structure and efficiency is very important.In premise of banking market structure and efficiency theory, conductedseparate statistical analysis with selected indicators for them. Based on SCP,analyzed and proofed the relationship between banking market structure andefficiency and established an empirical model. Measured the market structure withmarket concentration and market concentration and analyzed bank efficiency withDEA. Select the composite efficiency to measure the banking efficiency accordingto the results.Take four state-owned banks and12joint-stock commercial banks as the studysample, and picked the2004-2012as study period. First, processed data andanalyzed market structure; second, bank of input and output data is processed withDEAP and banking efficiency is also calculated. Finally, data regression wasconducted to the banking market structure and bank efficiency with eviews7.2afterthe Unit root test and cointegration test.According to theoretical analysis and empirical study, the followingconclusions were drawn. First, market concentration of Chinese commercial bank islower, indicating that commercial banks are developing from monopoly tocompetition. High concentration of China’s banking market structure is not formedby the competition, but by the form of policy guidance. Second, the changed trendof bank efficiency belongs to rising on the whole, besides the trend ofcomprehensive efficiency and allocative efficiency is basically consistent, but the trend of technical efficiency is basically stable. So the advanced of the bankcomprehensive efficiency mostly due to the ability of the resource allocation. Third,bank efficiency is not the main affecting factors for banking market structure, andcommercial bank market concentration has a negative impact on bank efficiency.The formation of China’s market structure depended on administrative policy notthe bank behavior. To improve market structure, bank management ability andefficiency need to be improved, and the objective of reducing the degr ee ofconcentration of market structure could be achieved.