Total Factor Productivity Measurement Of Joint-stock Commercial Banks And Determinants Analysis

The article measured the total factor productivity changes of China joint-stockcommercial banks and analyzed the influence from competition. The article firstlyreviewed the literatures about the effect of competition and foreign banks’entrance onbanks’ productivity in domestic and foreign countries, estimated the total factorproductivity changes of China joint-stock commercial banks during2000and2011bythe DEA Malmquist index method, and analyzed the effect of competition and foreignbanks’ entry to the total factor productivity of joint-stock commercial banks in China.The results told us that the total factor productivity of ordinary joint-stock commercialbanks was driven by technical changes. The average total factor productivity ofIndustrial Bank increased most. On the side of market power, the average Lernerindexes of the joint-stock commercial banks changed from negative to positive. TheLerner indexes of joint-stock commercial banks built by business entity were higherthan the joint-stock commercial banks built by local governments, but the gap wasnarrowing. After using panel data regression model, the result showed that thejoint-stock commercial banks had significant correlation with the Lerner index,foreign banks’ entry, asset size and the first big shareholder equity properties. Thetotal factor productivity of the joint-stock commercial banks had significant positiverelationship with the Lerner index, which meant that the greater market power, thehigher total factor productivity. It had significant positive relationship with foreignbanks’ entry, which meant that the foreign banks had distinctive positive effect on thejoint-stock commercial banks. It had significant positive relationship with the assetsize, which meant that the expansion of asset size was helpful to increase the totalfactor productivity. It also had relationship with the first big shareholder equityproperties, which meant that the total factor productivity was high when state shareswere participated. The joint-stock commercial banks had indistinctive relationshipwith cost rate of asset. Thus, the article suggested that joint-stock commercial bankstake the initiative to the challenges of private banks, learn foreign banks strengths,enlarge asset size appropriately, improve human resources management, perfectincentive system, multiple property rights and encourage financial innovation.