Measurement And Determinants Of Total Factor Productivity In Chinese Commercial Banking System

Commercial banks are bridging the gap of capital shortage and capital surplus in the modern commercial world.Measuring the total factor productivity of commercial banks,proposing effective techniques,and developing the index system for commercial banks’ efficiency guide us to improve bank’s operation outcome.Since the financial crisis of 2008,the topic of efficiency measurement in the banking industry has been in the ascendant.The literature on the efficiency measurement of China’s banking system in the post-financial crisis era is also constantly emerging.Among them,the efficiency evaluation of China’s banking system is also full of different views.This paper also starts from the problem of measuring the operational efficiency(total factor productivity)of commercial banks and selects appropriate methods and indicator systems to measure and evaluate the efficiency of three major commercial banks in China.The measurement shows that China’s commercial banks generally maintain the trend of total factor productivity(TFP)growth,the efficiency of state-owned banks is generally low,the efficiency of joint-stock commercial banks is high,and the efficiency of urban commercial banks is polarized.At the same time,given the launch of Basel III after the financial crisis and the tightening of China’s commercial banking supervision,this paper also tries to find out to what extent a series of factors which are linked with the regulatory framework will affect the TFP of commercial banks.To this end,this paper uses a Tobit regression analysis to conclude that leverage and liquidity indicators have different efficiency effects for different types of commercial banks.Leverage has a positive impact on the bank’s total factor productivity,while liquidity indicators show different patterns in banks with different property rights structures.For urban commercial banks,holding more non-interest-bearing liquid assets has a negative impact on their total factor productivity;for state-owned banks and joint-stock commercial banks,the increase in liquid assets has promoted their total factor productivity.