Study On The Operating Efficiency Of City Commercial Banks Based On DEA Model

Since City commercial banks establishment, it has been widely distributed in the major cities, and become an ignored force to the city’ s economic development. In the past several years, city commercial banks re-locate their functions, not only focus on the local economic services, but also through restructuring seeks for a path of cross-regional development among some better operated City commercial banks. However, with the rapid development of City commercial banks, there are also lots of toughs. City commercial banks have to constantly improve their management efficiency to dominate a room in the increasingly fierce competition.Owing to the city commercial banks’ management efficiency has become an ignored factor that influence the stable development of the financial system of Shandong Province, therefore, studying on the question of city commercial banks efficiency, has a very strong practical significance to improve the comprehensive strength of city commercial banks. Taking into account the availability of data, this paper’s sample comes from 13 city commercial banks of Shandong province.Firstly, this paper defined the efficiency of banks on the basis of previous studies. And further introduced the classification of bank efficiency, factors and measures. The paper also selected DEA model of the non-parametric analysis to measure the efficiency of city commercial banks of Shandong.Secondly, this paper introduced the operating status of city commercial banks of Shandong, then through theoretical analysis established the DEA model. we selected the owners’ equity, total deposits and total assets as input indicators, and net profit, total loans as output indicators. Then based on DEA Model, we tested the operating efficiency of 13 commercial banks of Shandong Province between 2011 and 2014. and detailed analyzing the relationship among the technical efficiency, pure technical efficiency and scale efficiency.Then. On the basis of theoretical analysis, we select eight variables, bank scale, asset quality, profit ability, operation management, Intermediate business income, asset allocation, equity structure, Human resource level, as the independent variables which influence Shandong City bank’s efficiency. Choose technical efficiency between 2011 and 2014 which can be tested as the dependent variables. Then Select the method of linear regression to test their relationship. The results show that the operation-management, resource allocation and the level of human resources through the test of significance, have Significant relationship with bank efficiency.Finally, according to the regression analysis, this paper form the perspective of optimize the allocation of resources, improve the level of human resources and the management ability, to suggest some opinions about how to enhance Shandong City bank’s efficiency.