The Comparison And Analysis Of Efficiency Between Banks FHC And NON-Financial Holding Company In Taiwan

This study aims to understand whether the banks under the FHCs can have better performance. By polling 13 banks inside of FHCs and 27 independent banks outside of FHCs in Taiwan, business efficiency was compared The study lasted for total 6 years, from December 2001 to December 2006. Fund, interest payments and capital were taken as input variables; loan, interest income and long-term investment as the output variables. We first have the Data Envelopment (DEA) analysis method as the main axis, CCR model and BCC model respectively to obtain technical efficiency (TE), a purely technical efficiency values (PTE), the scale of efficiency (SE), laterally calculated 40 banks'ROA and ROE financial performance and then employ the Tobit regression method, taking technical efficiency (TE), pure technical efficiency (PTE) and the scale technical efficiency(SE) as dependent svariables, and choose the variables other than input and output factors. such as profitability, corporate governance, human resources, asset quality as the explanatory variables, impact and investigate the efficiency of other external factors.Pertinent study findings are concluded as follows:First, Based on the efficiency value of each bank, we can get that in the six years that Taishin Bank and the China Development Bank can be evaluated as fully efficient, these two banks are under FHC. In the past six years, Bank of Overseas Chinese is a non-overall efficient bank, which is outside of FHCs.Second, in respect of TE, PTE and SE, the banks inside FHCs is better than outside of FHCs.Third, after banks'setting up the financial holding companies; only two banks increased average efficiency, seven banks declined. Thus, the establishment of financial holding company has failed to improve its operating efficiency.Fourth, after the financial holding company established, the bank's efficiency trends downward in terms of technical efficiency (TE), purely technical efficiency values (PTE) and the value of the efficiency scale (SE), whether it is under FHC or not. Fifth, FHC's establishment caused a backward trend in independent banks'management, strategy-making or are and the scale of optimum production. Sixth, To explore other possible impacts on the banking sector efficiency by Tobit regression model to profitability, corporate governance, human resources, asset quality to, the degree of impact assessment, results are as follows:(1) Since ROA has a very significant impact on the variable: profitability, reaching 1 per cent level, it indicates the scale of changes that are operating under management's correct decisions, the factor inputs can be more efficient, thereby making efficient utilization of assets. There is a negative correlation between ROE and pure technical efficiency, and the X2 p-value isof only 0.093, 10% notable standard, which infers that ROA and ROE do influence the efficiency of pure technical efficiency.(2) In regard to management the precedence in the board has a positive effect on pure technical efficiency , achieve significant 5% level. It clearly shows the consistency relationship between precedence in the board and management which does enhance the bank's efficiency.(3) In terms of human resources, there is a positive correlation between the number of bank employees, the average age of employees and total efficiency. The number of employees and purely technical efficiency are positively related, reaching 1% notable level, indicating that with higher number of employees the banks can upgrade the existence of a large-scale efficiency, and this is the same as expected direction.(4) Concerning asset quality, capital adequacy ratio and pure technical efficiency values are positively related. The bank's assets quality and efficiency are closely related, the higher the capital adequacy ratio, the lower the of using bank funds. Yet this variable is not significant. Over-loaning ratios, the number of branches and technical efficiency are negatively correlated. Especially the more branches, the more sales locations, thereby increasing their sales channels, which benefits the bank operation . And this variable reaches significant 5 percent, indicating that the number of branches has significant relationship with the bank's overall operating efficiency.