Research On Competitiveness Of Commercial Banks From The Perspective Of Comprehensive Management

Banks’competitiveness has long been a great concern to the research institutions, scholars and financial practitioners. The finance of China has changed a lot during the30years of reform and opening up. Especially after China’s entry into the WTO and the opening up of domestic financial market, research projects about finance become more and more practical significance. Financial industry is closely linked to a national economy and social development. Its effective operation can promote the rapid development of economy and increasing of the total social welfare.Finance industry includes three sub-industries, banking industry, securities industry and insurance industry, of which banking is industry is the most important. Therefore, this dissertation mainly researches on the banking industry. Whereas financial comprehensive management is a big concept, analysis on the other two industries can’t be avoided in the discussion, so tthis paper mainly focuses on the research of banking industry from the comprehensive management perspective of financial industry cluster. With the foreign banks’entry into China’s market, the market structure and competitive pattern of China’s banking industry has changed a lot because of the shocks from the outside financial institutions. Commercial Banks should not only face to the competition comeing from domestic banks, but also from the foreign banks. China’s banks not only maintain the original competitive advantages but also learn from the foreign bank institutions advantages and then enhance the comprehensive competitiveness. In this paper foreign banks are compared to domestic commercial banks under the background of financial openness. Comparing domestic commercial banks with the foreign ones, you will find the fundamental differences in their management models. Many large foreign commercial banks carry out comprehensive management, which is a valid combination among banking, securities and insurances, even with industries. The pattern in China’s commercial banks is separate operation, in which there are strict restrictions among the three financial industries. Along this research direction, further studies in the paper show that in fact, nowadays many China’s financial institutions have carried out comprehensive management. In the past ten years, to raise the international competitiveness, many domestic financial institutions have established holding companies overseas and came back to the home market and develop businesses which were restricted originally. This forms comprehensive management model virtually. However, according to the laws and regulation rules, separate operation is still the main management model in China’s financial industry. So to make it clear, the concept about comprehensive management is defined as a transition mode between the separate operation and mixed operation in this paper. Besides, the comprehensive management concept is extended into three levels, diversified management, mixed operation and international management. Based on the above, the thesis evaluates to China’s banking competitiveness by SCP, a method coming from the industrial economics. Aanalyzes the impact from market structure to market performance and market conduct. In the end, factor analysis method is adopted to evaluate to China’s commercial banks’comprehensive competitiveness. Banks’comprehensive management factors are taken into full consideration when selecting indexes. Details are as follows:1. Research on pattern and level of of banking industry’s comprehensive managementThe chapter starts with a general survey on the comprehensive management of domestic and overseas banks. By comparing the pattern and level, it aims to discover the differences between them and analyze the reasons for the differences from the macroscopic environment and policy. In this chapter, elements are selected to make measurement and analysis on China’s commercial banks.2. Appraisal on China’s banking industry’s market structure, market conduct and market performance by SCPThis chapter mainly makes a measurement and analysis on China’s banking industry’s market structure, market conduct and market performance according to the SCP analysis method, and uses indexes such as market concentration, market share, scale cost barriers to entry to estimate the market structure of China’s banking. Furthermore, a comparative analysis on banks’market performance, including price behavior, marketing and organization adjustment behavior, is given. By analyzing the bankcard business and international settlement business, the differences among domestic banks and foreign banks are revealed. Finally, Chinese commercial banks’market performance is estimated by Data Envelopment Analysis (DEA) model and Stochastic Frontier Analysis (SFA) model.3. The evaluation index system about comprehensive competitiveness of China’s commercial banks was built. The conclusion is compared to the "Bankers" ranking results.The innovation of this thesis is summarized as follows:1. Study on the banks’comprehensive competitiveness from the perspective of industrial economics.Both domestic and foreign intuitions’experts and scholars have done many studies on the evaluation of banks’competitiveness, and the index system is relative consummate, but there are a lot of differences in the result. The thesis aims to analyze banks’competitiveness from the view of industrial economics. By analyzing the market structure and enterprise behavioral characteristics, the market performance is evaluated with a complete evaluation process and accurate conclusion. Appraisal on banks’performance or competitiveness without considering the banking industrial structure features would be significantly affected by indexes. Different indexes will bring different results. Moreover, the thesis tries to analyze banks’comprehensive competitiveness from various aspects including market, market performance and market behabior to avoid the uncertainty of single index assessment.2. Study on banks’comprehensive competitiveness, including the existing and the potential, from the perspective of comprehensive management.The comprehensive management of finance not only brings financial institutes the economies of scale and scope in a micro sense, but also optimizes the entire social welfare from Pareto’s respect. It integrates and enhances the usage of resources effectively and efficiently as well as meets both companies’and individuals’various and unified financial service demands. Meanwhile, it can avoid risks strongly. With the development of information technology, financial liberalization and globalization, a growing number of countries are getting keen on combined financial operation. With the increasingly fierce international competition in the financial industry and ever-emerging innovative products, multi-operation is showing its advantages, posing a growing trend of the new age and possessing potential competitive merits in the development of the finance. With the overall openness of China’s financial market, our banking industry must speed up the multi-operation process in order to take the dominant position in the international market. From this aspect, under the background of financial openness, the thesis investigates China’s banks’comprehensive management level and its competitiveness systematically through longitude and latitude comparison. Many scholars have estimated banks’comprehensive management level, but few from the perspective of multiple operation. As a development trend, the financial multi-operation will be an important factor in testing banks’potential competitiveness in the future. Many of the existing papers take banks’diversification management as a factor to discuss when referring to the financial or banks’competitiveness, yet the most innovative aspect in the thesis is that it assesses banks’competitiveness exhaustively and systematically and gives it a concrete and generate concept from the comprehensive management.3. Applying various assessment methods to estimate banks’comprehensive competitiveness.There are various methods to assess banks’competitiveness. Through comparing the advantages and disadvantages of these methods, it seems that DEA is the most suitable method for evaluating banks’input and output performance, which can be applied easily for its simple requirement on units. However, its standard on samples and indexes is relatively high. Generally, the samples should be no less than twice of index variables. Five large commercial banks and twelve shareholding commercial banks are selected in this thesis so the samples are relative few. When banks’comprehensive competitiveness is evaluaed, various indexes should be taken into consideration, such as profitability, liquidity, security, stability and asset quality index, etc. During the data processing operation for correlation analysis, some data may be removed, thus the existing sample data is few and indexes are excessive, resulting in unscientific and unstable conclusion, so DEA model is chosen to assess commercial banks’competitiveness in this thesis. Actually, both DEA and Analytic Hierarchy Process (AHP) are suitable for system comprehensive evaluation, while the latter needs to design questionnaires for experts to give a mark to determine weight coefficient of indexes, it can result in subjective conclusions and the process of operation is complex. While the weight coefficient of the factor analysis method can be gained by the factor contribution ratio, which can be easily operated. Also it can avoid subjective instability. Hence, after estimating various evaluation methods, the thesis uses factor analysis method to evaluate on banks’competitiveness and makes a comparative analysis with the results from DEA.