Research On Bank Efficiency And Influencing Factors Of China’s City Commercial Banks

As a part of the banking financial institutions, the efficiency of city commercial banks isof great importance to their development. Based on the input and output data, this paperestimates the efficiency of city commercial banks. This paper randomly select28citycommercial banks in Bankscope database, and use DEA by choosing net fixed assets, totaldeposits and expenditures as input indicators, total loans and pre-tax profits as outputindicators, arriving at the conclusion that city commercial banks inefficiency during thesample period.In this paper, Malmquist total factor production function is also used to analyze the factorproductivity change in the sample period, finding that scale inefficiency, low technicalefficiency or the interaction of them caused the low efficiency of the banks. By compare threelisted city commercial banks to unlisted city commercial banks, arriving at the conclusion thatthe efficiency of the listed city commercial banks is much higher than the unlisted ones aslisted ones are easy to raise money, supervising the risks, good equity structure and theintroduction of strategic investors. Contrasting banks from the eastern, middle and westernChina, concluded that efficiency of city commercial banks of eastern China is higher than thatof middle China and western China.At last, an empirical test is made through Tobit regression to explore possible factorswhich may affect the efficiency of the city commercial banks. The empirical results show thatthe bank’s security, profitability and local GDP is positively related to the efficiency of citycommercial banks, while the bank’s size, liquidity and income structure bank efficiency doesnot significantly affect the efficiency. Based on that, some suggestions are made from theperspective of banks, local government and regulators.