City Commercial Bank Efficiency Research Based On The Cross-regional Development Strategy

In the economic transition period of our country, Finance reform is graduallydeepened and the financial system is gradually developed into health and prosperity.Commercial Banks as the core of financial system in our country, their developmentstatus will affect the whole national economy. The efficiency of a bank can reflect itscapacity of output, its ability to resource configuration, and its core competitiveness ofthe market. It plays an active role in driving the economic structure, promoting theregions’ harmonious development, improving people’s livelihood, etc.In recent years, City Commercial Banks are constantly improving the level of theirmanagement and promoting the innovation of products and technology on the base offully dissolving the risk of history. Their developments have made remarkable results,City Commercial Banks have been the third largest financial team which after the rowof the five big State-owned Commercial Banks and the National joint-stock CommercialBanks, and have been an important part of our country’s banking system. With theimprovement of the asset quality and the risk management capacity, In order to againstthe more intense competition in the market, City Commercial Banks who treat the smalland medium-sized enterprises as the main client are accelerating the pace to reform andinnovation: The integration of the market is promoted continuously, more and more CityCommercial Banks have got the qualification of cross-regional business. By setting updifferent branches, City Commercial Banks can occupy more market shares. With thegrowing competition between banks, City Commercial Banks are facing the pressure tosurvive that need to improve the core competitiveness to achieve the needs ofsustainable development. The evaluation of banks’ efficiency can synthetically reflectits internal management level, the ability of resources’ allocation and the ability ofcosts’ control. Therefore, the evaluation that whether cross-regional business hascontinuous improvement effect on the efficiency of City Commercial Banks isparticularly necessary.This paper starts from the analysis of bank efficiency. Then we review thedevelopment of cross-regional business and for the City Commercial Banks in thecurrent development of cross-regional business has made a summary. Based on the largestate-owned Commercial Banks, national joint-stock Commercial Banks and CityCommercial Banks, this paper chooses41banks as the sample, business that between in 2007-2012as research content. We calculate the bank efficiency by using the networkDEA model which treats the deposit as the intermediate variable to evaluate andanalysis the change of banks’ efficiency. Through the comparative analysis about thestate-owned Banks, joint-stock Banks and City Commercial Banks, we discuss thefactors that have influence on the banks’ efficiency, and then we use the Mann-Whitneytest to analysis whether the City Commercial Banks’ cross-regional developmentstrategy can effectively improve their operational efficiency. The results show thatcross-regional development of City Commercial Banks has a positive role on the bank’sefficiency. At the same time, it also has potential risks. This paper presents somerecommendations such as avoiding blind expansion in the process of cross-regionaldevelopment, operating a differentiated management on the cross-regional developmentand improving the risk control system to promote the reform and innovation of thebanking industry.