Research On The Efficiency Of China's Banking Industry Based On DEA Model And Benchmarking

The Fifth Plenary Session of the 18 th CPC Central Committee adopted the recommendations on the formulation of the “13th Five-Year Plan” and pointed out that it is necessary to accelerate the reform of the financial system and improve the economic efficiency of the financial services entity.China's financial system is typically bank-based.The operating efficiency of the banking industry affects the efficiency of resource allocation and sustainable development of the entire financial system.Therefore,the research on the efficiency of China's banking industry has certain theoretical and practical significance.After sorting out the literature on banking efficiency research at home and abroad,this article analyzes the relevant theories of bank efficiency,including the meaning,classification,and analysis methods of bank efficiency.After comparing the parametric method and the non-parametric method,the DEA model in the non-parametric method is used as the method to measure the efficiency of China's banking industry.To use the DEA model to study the efficiency of the banking industry,the first key issue that needs to be solved is to choose a reasonable input-output indicator.Since there is no consistent conclusion on the selection of input-output indicators in the current academia,selecting different input-output indicators will make the results of the study different.Therefore,at the same time,this article uses production method and intermediary method to define input-output variables to comprehensively analyze the efficiency of China's banking industry.This paper uses the DEA model to study the efficiency of China's banking industry in 2009-2016.The main conclusions are:(1)The overall technical efficiency of China's banking industry is high under both the production method and the intermediary method,but the technical efficiency under the intermediary method is higher than that under the production method.(2)Under the intermediary method,the technical efficiency of state-owned banks has shown an upward trend over time,while under the production method,its technical efficiency has fluctuate over time,with no significant upward or downward trend;however,for joint-stock commercial banks,whether in intermediary method or in production method,the trend of its technical efficiency is roughly the same.(3)Under the production method,the effect of pure technical efficiency and scale efficiency on technical efficiency is quite similar.Under the intermediary method,the effect of pure technical efficiency on technical efficiency is greater than that of scale efficiency.(4)Whether under the production method,or the intermediary method,in the past seven years,the pure technical efficiency of joint-stock commercial banks has been lower than that of state-owned banks,and the scale efficiency is higher than that of state-owned banks.By using DEA effective banks to form the frontier of benchmarking,the use of benchmarking measures the gap between the inefficient banks and the frontier of benchmarking.The main conclusions are:(1)Some sample banks do not have redundant input or insufficient output,and their input-output structure is reasonable.It is the inappropriate scale of input-output that makes banks inefficient.A rational choice of operating scale should be based on the bank's returns to scale.(2)Most banks have redundant input or insufficient output.By comparing and analyzing the input redundancy rates and output insufficiency rates of various banks,we can find out the direction of bank efficiency improvement.Based on the above analysis,the paper proposes three suggestions for improving the efficiency of China's banking industry,including further deepening the reform of state-owned bank property rights,correctly viewing the issue of scale expansion and market share,and accelerating the progress of banking technology and financial innovation.