On The Operational Efficiency Of Chinese Commercial Banks Using DEA Method

Banking sector is the mainstay of the country’s entire financial system. It plays an important role in serving the real economy and promoting the healthy development of the national economy. Measuring and evaluating the operational efficiency of commercial banks and their changes are meaningful. Efficiency, in a nutshell, that is the ratio between income and expenses. The fundamental implication is that the minimum investment of a given predetermined output or the maximum output of a given predetermined input.Up to now, scholars have made continuous exploration and improvement of the data envelopment analysis (DEA). And have made many contributions on the analysis of Chinese commercial banks operational efficiency. However, the competition among Chinese banks and from outside the industry is even more intense. Efficiency of the banks is constantly changing. Therefore, this paper uses the most recent data (2007-2012). to make empirical research on the operational efficiency of Chinese commercial banks (technical efficiency, pure technical efficiency, scale efficiency and technical super-efficiency). In addition, the paper will make a comprehensive analysis combine the commercial banks super efficiency value given by super-efficiency models and core capital to obtain the "big and strong" commercial bank (core capital is higher than the average core capital and super-efficiency values greater than1) as surveyor’s pole. In this article, the benchmark Bank is Bank of Communications. Then make case analysis on Bank of Communications.The thesis contains four chapters.Chapter1, Introduction. This chapter introduces the research background and significance of this paper. Describe the importance of Chinese commercial banks and the great opportunities and challenges facing in the economic situation and financial environment. Then, give the current research. Finally, give the research methodology and basic framework used in this paper. Chapter2is Chinese commercial banks operating efficiency analysis. This chapter first gives an idea of the commercial banks operating efficiency. Then describe the financial analysis. Finally, describes the basic DEA methods, including CCR, BCC and technical super-efficiency models.Chapter3is the empirical analysis of Chinese commercial banks operating efficiency. This chapter first gives sample banks selection, using21major commercial banks on behalf of Chinese commercial banks. Then give input and output indicators used in DEA analysis. Then adopt financial analysis to do a statistical quantification empirical analysis on the development of Chinese commercial banks. Further, this chapter use DEA model, make empirical analysis on21samples of commercial banks operating efficiency (technical efficiency, pure technical efficiency, scale efficiency and technical super-efficiency). Finally, rank the21banks according to super efficiency value in2012obtained by the technical super-efficiency model.In the DEA model, this paper chose customer’s deposits, the average number of employees as the input indicators, net loans, fee and commission net income as output indicators. Meanwhile, the21sample banks will be divided into three categories as large national commercial banks, national joint-stock commercial banks and local commercial banks. The operating efficiency of these three types banks were compared and analyzed.Chapter4is case analysis. Make a comprehensive analysis combine the commercial banks super efficiency value given by super-efficiency models and core capital to obtain the "big and strong" commercial bank (core capital is higher than the average core capital and super-efficiency values greater than1) as surveyor’s pole. In this article, the benchmark Bank is Bank of Communications. Then make case analysis on Bank of Communications.