Research On Evaluation For Financial Innovation Efficiency Of City Commercial Banks

Chinese city commercial banks are basis on the formation of city credit union to meet the demand of city commercial banks, small and medium business entities and play an important role in regional economic development. However,with the arrival of the interest rate market and financial disintermediation, city commercial banks with the traditional approach are facing unprecedented challenges.Financial innovation is the motive power for development of commercial banks. However, financial innovation is a "double-edged sword" for Chinese city commercial banks that develop rapidly at this stage, and we cannot tell whether it is the motive power to stimulate bank development or the stumbling block of causing risks. Therefore, it is quite important for long-term development of city commercial banks at this stage to accurately evaluate innovation efficiency of banks and grasp the innovation measurement.By setting innovation efficiency evaluation of city commercial banks as the topic, this paper starts form the theoretical basis of financial innovation and discusses composition of financial innovation as well as generation of innovation efficiency by combining with the reform and development history of city commercial banks. This study is mainly conducted from the following two aspects:firstly, horizontal comparative analysis is carried out for innovation efficiency among Chinese city commercial banks, state-owned banks and stock-owned banks, and internal comparative analysis is made for innovation efficiency of28Chinese city commercial banks in different economic regions by introducing weighted DEA model and M index from static and dynamic angles. According to the research, the overall innovation efficiency of Chinese city commercial banks is low, and the internal efficiency possesses different levels; innovation efficiency of city commercial banks in the east and central region is higher than that in the northeast and west. However, what truly decides innovation efficiency level of city commercial banks is ownership structure and company governance. Total factor production index of the three types of banks is greater thanl, and it presents the character shape of "Tu". Its overall shape is related to Chinese financial policy, monetary policy, and economic trends. In the increase of total factor production index, technical progress makes the greatest contribution.Secondly, Tobit panel data regression is conducted for factors that affect innovation efficiency of28Chinese city commercial banks via Stata software; empirical analysis is carried out for the depth and direction of the influence of ownership structure and company governance factors on innovation efficiency of Chinese city commercial banks. According to the research, Supervisory Board System of China’s city commercial banks and employee motivation did not play its due role. On the contrary, affiliated agency, the introduction of strategic investors and enhancing innovation ability will bring innovation efficiency improvement.Finally, according to empirical study in the previous part, relevant policy suggestions are proposed from the aspects of external financial environment and government regulation as well as internal company equity governance and business operation, so as to enhance innovation efficiency of city commercial banks.