The Study On The Efficiency And Affecting Factors Of Listed Commercial Banks Of China

In China's long-term background of the dominance of indirect financing, the bank which is an important financial institution dealing with money and credit, serves as an irreplaceable role for the accommodation of funds and the real economy. With the deepening of financial reform, commercial banks need to expand their business scope, provide new contents and forms of services, build a more convenient and effective platform, to retain sufficient competitiveness in a more open and free market.In recent years, China has accelerated the process of marketization of interest rates, however, a large proportion of the traditional business and the interest rate spreads is still the main source of profit, the interest rate marketization,narrowing the spreads of interest rates,brings a direct impact on the profitability of commercial banks.With the establishment of economic power status and the market with a more closely linkage to the world economy, the formation mechanism of the RMB exchange rate is constantly being improved, in the long run changes in the exchange rate as well as the interest rate will be greater reliance on supply and demand, showing greater uncertainty, which will give commercial banks mismatch of assets and liabilities as well as foreign exchange losses and other risks caused by mispricing and duration error. According to relevant agreement from China's accession to the World Trade Organization, starting in December 2006 it should be opening up the financial industry, gradually release the foreign banks'operation restrictions in China. So it is possible that foreign banks expand their market share by non-traditional credit business, which will no doubt result in direct business impact on the business of China's commercial banks. As the expansion of the size and number of foreign banks, the introduction of foreign institutional investors, the competition pattern of China's banking industry is becoming more diversified. With the introduction of a large number of capital, technology and management experience, it also highlights China's commercial banks defects in product innovation, management mode, asset quality and risk management and other aspects. Thus, a research on the development of an appropriate model to measure the efficiency of China's commercial banks and explore the factors affecting the efficiency has theoretical and practical significance:At the micro level, these studies can provide references for the optimization of the allocation of resources and the adjustment of the management principles for commercial banks; from a macro perspective, facing narrowing spreads of interest rate and rising ratio of the NPL, China's commercial banks need urgent transformation, and efficiency analysis can provide ideas and direction for it.This article outlines the domestic and foreign efficiency theories and research methods on Commercial Banks, measures the efficiency level of 16 listed commercial banks in the 2007-2014 period in the cross-section using DEA, analyses trends of the technical efficiency, pure technical efficiency, scale efficiency and the differences among each sample banks, between state-owned banks and joint-stock commercial banks. Then it conducts a dynamic measurement on the efficiency level of these sample banks using DEA-Malmquist model, obtains each bank's Malmquist TFP index and its decomposition index, and analyses trends in total factor productivity. Bank efficiency is an important indicator of the resources allocation capability, which is for a comprehensive evaluation of the input and output of banks. A study on efficiency of commercial banks can reflect the gap between the each bank and the leading edge but also the gap among each type or each bank. After the measurement and analysis of commercial banks efficiency using non-parametric method and Malmquist model, this paper conducts a qualitative analysis of the factors influencing the bank efficiency and a regression analysis of the factors that influence the technical efficiency of commercial banks using DEA-Tobit models empirically. The regression analysis of these factors can provide ideas for the improvement of the management strategy for commercial banks, and play a significant role to enhance the overall efficiency of China's commercial banks. For the above analysis conclusion, the article finally puts forward relevant policy recommendations on how to improve the efficiency of China's commercial banks.The main conclusions of this article are as follows.(1)Overall, since 2007 the average technical efficiency, pure technical efficiency and scale efficiency of China's commercial banks has remained at a high level, which is a great achievement attributed to the China's banking industry continued in-depth reform. At the same time it can be seen that the difference between deposit and lending interest rates is narrowing, operating costs of banking industry are rising, as the promotion of the market-based interest rate and the stabilization of the macroeconomic growth so that the level of technical efficiency of China's commercial banks slows down. The Joint-stock commercial bank efficiency level is higher than the state-owned bank, but with the state-owned banks more market-oriented and shareholding reform, their market competitiveness and efficiency levels have been significantly improved, the gap of the efficiency level between the joint-stock and the state-owned bank is also gradually narrowing.(2)The Malmquist index of China's listed commercial banks is less than 1 only from 2013 to 2014 and is greater than 1 in other years, indicating that the efficiency levels of the sample banks in general are rising year by year, which is attributed to the continuous promotion of the reform measures of the banking sector since 2003.However, the non-performing loans ratio has picked up in 2014, which limits the profitability of the banking sector to some extent, resulting in the level of efficiency decreasing. From 2007 to 2014,the average annual growth rate of the Malmquist index of the sample banks is about 5.6 percent, of which technological change index growth rate is about 5.1%, while the technical efficiency index growth rate is about 0.5%. It can be seen from the overall perspective that the main source of improvement of the bank's efficiency level during the study period is technological progress, which describes technological progress and innovation has become an important factor of efficiency progress. This is closely related to the diversified development of bank services pattern and mode of payment. The setup of the electronic payment and modern accounting settlement system help to enhance the level of efficiency.(3)Seen from the regression results of DEA-Tobit model, the impact of the industry concentration and growth rate of total fixed assets, as control variables, on efficiency of the commercial banks was not significant. Both non-interest income ratio and loan-deposit ratio have significant positive correlations with commercial banks technical efficiency while the structure of property rights and non-performing loan ratio have negative correlations with technical efficiency, approved by significance test. It provides a theoretical reference for the optimization of the structure of property, improvement of corporate governance and especially the shareholding reform of the state-owned banks.The innovation of the paper is as follows.(1)The paper measures the technical efficiency and Malmquist TFP of the sample banks by a non-parametric method-DEA model, with a look at the level and trend of bank efficiency since 2007 from the perspective of static and dynamic, which help explore the reasons for the change of the efficiency of commercial banks.(2)The paper conducts a regression analysis for the factors influencing the efficiency of commercial banks in China using the Tobit model, which circumvents the defect of the least squares estimation method, to obtain more robust and more realistic estimate of parameters.(3)This paper selects 2007-2014 listed commercial banks as samples, which makes the measure results and relevant recommendations more timely and valuably.