On The Efficiency Of Commercial Banks In Shandong Province

As the interest rates liberalization, advancing deposit insurance system and development of new financial industry, such as the Internet financial, all of these serious impact on the traditional banking business philosophy and development model. The competition in banking is more vigorous. The commercial Banks in Shandong province have to improve the core competitiveness. This article studied the bank efficiency which is the concentrated reflection of its core competitiveness. Based on the cutting edge of research methods, more abundant research object and the latest data for innovation point, this paper studies the efficiency of commercial Banks in Shandong province, then base on the influence factors, I puts forward corresponding suggestions.Firstly, author summarizes the background and significance of this research, and gives the definition of bank efficiency and talk about the calculation methods of the efficiency of commercial banks.Secondly, by using Network DEA, we measure the efficiency of Shandong’s commercial banks. We select the number of employees and operatingexpenses as input indicators. We select deposit as intermediate variable. We select loan and net Profit as output indicators. This part consists of two sections. On the one hand, we measure 17 commercial banks’ efficiency from 2008 to 2013, including five big state-owned commercial Banks and twelve joint stock commercial Banks. On the other hand, we measure the efficiency of four types of financial institutions in Shandong province from 2010 to 2013. The study found: 1、The technical efficiency and pure technical efficiency of large state-owned commercial Banks in Shandong province are lower than joint-stock commercial Banks’, but the gap between two types of Banks in narrow, even the pure technical efficiency of state-owned commercial Banks catch up with the joint-stock commercial Banks in 2013. 2、For large state-owned commercial Banks, the reason of low efficiency mainly comes from the pure technical efficiency rather than the scale efficiency. For joint-stock commercial Banks, the scale efficiency rises in the past two years, instead of pure technical efficiency in the downward trend. 3、The technical efficiency and pure technical efficiency of rural cooperative financial institutions is the lowest in four types of financial institutions.Thirdly, the author uses the Tobit Model on the influential factors of the efficiency of Shandong’s commercial banks. We find the profit ability, innovation ability, asset quality, liquidity and bank scale effect on bank efficiency. To improve the efficiency of commercial bank, this paper argues that we should improve bank profitability, strengthen banking innovation ability, improve the quality of assets and moderate the scale of bank.